* August ABI up 1.5 points to 50.2 - trade group
* New projects inquiry index 57.2
* Strongest activity in U.S. South region
NEW YORK, Sept 19 (Reuters) - A leading indicator of U.S. construction activity rose last month to its best level in five months, indicating that demand for design services is expanding, an architects' trade group said on Wednesday.
The architecture billings index (ABI) rose 1.5 points to a reading of 50.2 in August, according to the American Institute of Architects. Any reading above 50 indicates an increase in demand for architects' services.
The ABI is considered a predictor of U.S. construction activity nine to 12 months ahead.
A separate measure of inquiries for new projects rose 0.9 points to 57.2, the group said.
These monthly indexes are tracked by industrial companies and their investors as an indicator of future demand for machinery and components used to erect buildings. Most diversified manufacturers derive at least some sales from construction of office buildings, retail and warehouse space.
Companies exposed to the sector include Honeywell International Inc, Tyco International Ltd, Ingersoll Rand Plc, Cummins Inc, Eaton Corp , Manitowoc Co Inc, Caterpillar Inc, Deere & Co and Terex Corp.
European companies such as Siemens AG, Schneider Electric SA and lock maker Assa Abloy also get a portion of revenue from construction.