A leading indicator of U.S. nonresidential construction spending dropped to its lowest level in three months in August as developers continued to find it tough to finance new projects.

The Architecture Billings Index fell to 41.7 in August from 43.1 in July, the American Institute of Architects said on Wednesday. Readings below 50 indicate contraction rather than growth.

The overwhelming majority of architects are reporting that banks are extremely reluctant to provide financing for projects, and that new equity requirements and conservative appraisals are making it even more difficult for developers to get loans, said AIA Chief Economist Kermit Baker.

Activity was weakest in the U.S. West and strongest in the Northeast, with demand for new institutional buildings particularly low.

U.S. companies with significant exposure to the nonresidential construction sector include Caterpillar Inc , Honeywell International Inc , Ingersoll-Rand Plc and Acuity Brands Inc .

(Reporting by Scott Malone; editing by John Wallace)