Recovery seen in 12 to 18 months - Confidence improves, but growth still elusive

U.S. construction companies seeking financing for new buildings still find credit hard to come by, although conditions have improved slightly from the previous quarter, according to a new survey.

About 13 percent of those surveyed by McGraw-Hill Construction, a unit of McGraw-Hill Cos (MHP.N), said project financing was getting easier, up from 7 percent who said so in the first quarter.

But far more contractors and engineering companies, 39 percent, say project financing is actually harder to obtain, and a majority of respondents say the current market continues to decline. The survey polled about 2,000 U.S.-based contractors and engineers.

Half believe the construction market will improve within 12 to 18 months, according to the Construction Industry Confidence Index, published by McGraw-Hill's Engineering News Record magazine. The confidence index jumped 7 points in the second quarter to 41 points, but that is still below the 50 level that indicates a growing market.

Another closely watched barometer of construction spending, a billings index published by an architects' trade group, suggests recovery will not begin until 2011. That index fell last month after three months of gains [ID:nN22237544].

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), electrical products maker Hubbell Inc (HUBb.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), Mueller Water Products Inc (MWA.N), Watts Water Technologies Inc (WTS.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 byNick Zieminski; Editing by Lisa Von Ahn)