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WASHINGTON — The price of key ingredient in white paint is declining at a faster pace, signaling that a pickup in manufacturing activity could lose some steam.
Titanium dioxide prices fell 7.3 percent over the 12 months ending in August, the Labor Department reported Tuesday. That suggests the pace of home construction, renovations and manufacturing will be plodding in the coming months, analysts said.
"I think the white paint index is signaling that the manufacturing recovery may be short-lived," said Richard Yamarone, economist at Argus Research.
Economists track titanium dioxide as a barometer of the country's overall economic health. When people are buying homes, remodeling or even getting a house ready to sell, they buy paint. About 419 million gallons of paint were sold last year, more than a third of it was white.
The price for titanium dioxide, which is not seasonally adjusted, tends to be volatile and should be viewed with caution, analysts say.
In July, prices fell 4 percent over the year. That came after a 4.6 percent drop in June, and a 5.1 percent decline in May. That stretch of smaller price declines for titanium dioxide came as the recession eased its grip.
Many economists predict the economy is growing again in the current quarter, but they are bracing for a bumpy recovery. One of the biggest hurdles: rising unemployment. It climbed to 9.7 percent in August, a 26-year high, and is expected to top 10 percent this year. That could crimp consumer spending, the single-biggest driver of national economic activity.
White paint is used on a wide variety of manufactured goods, including cars and household appliances.
Economists predict industrial production will rise 0.6 percent in August, up from a 0.5 percent increase in July. The Federal Reserve is scheduled to release that report Wednesday morning.
The Cash for Clunkers program, which gave car buyers a cash rebate for trading in their gas guzzlers, has lifted car sales and boosted production. However, the program ended last month and some analysts believe there could be smaller gains in manufacturing activity in the coming months.
