* April architecture billings index down 2.6 pts
* New project inquiries also down in May
* Lenders cautious about making construction loans
NEW YORK, June 23 (Reuters) - A leading indicator of U.S. nonresidential construction spending fell in May after three months of gains, as lenders remain cautious about making construction loans, according to an architects’ trade group.
The Architecture Billings Index was down 2.6 points to 45.8 last month, after reaching its highest level since January 2008, according to the American Institute of Architects. A measure of inquiries for new projects fell 4.1 points to 55.5.
Readings above 50 indicate expansion, while those below 50 to declining demand. May’s results were a surprise, since earlier readings had pointed to recovery, said AIA Chief Economist Kermit Baker.
“The overriding issue affecting the entire real estate sector is unusual caution on the part of lending institutions to provide credit for construction projects,” Baker said.
Of four U.S. geographic regions, only the Northeast was above 50 in May, and only the commercial/industrial sector stood above that mark. Categories include institutional architecture, commercial and industrial space and the mixed-practice category, which combines retail and other uses.
The AIA’s billings index, begun in 1995, is an indicator of construction spending nine to 12 months in the future. It is often cited by companies that sell to the construction sector as a reliable gauge of that market.
Companies generating revenue from construction include diversified manufacturer Honeywell International Inc (HON.N), lighting maker Acuity Brands Inc (AYI.N), electrical components maker Thomas & Betts Corp TNB.N, security and fire safety products maker Tyco International Ltd TYC.N, and heating and cooling systems makers Ingersoll-Rand Plc (IR.N) and Johnson Controls Inc (JCI.N).
Among other companies that get sales from the sector are Caterpillar Inc (CAT.N), Deere & Co (DE.N), Terex Corp (TEX.N), Illinois Tool Works Inc (ITW.N), Cooper Industries plc CBE.N, Emerson Electric Co (EMR.N) Parker Hannifin Corp (PH.N), Manitowoc Co (MTW.N), Oshkosh Corp (OSK.N), ITT Corp (ITT.N) and Eaton Corp (ETN.N).
Reporting by Nick Zieminski, editing by Bernard Orr