WASHINGTON - The price of a key ingredient in white paint is declining at a faster pace, signalling that a pickup in manufacturing activity could lose some steam.

Titanium dioxide prices fell 7.3 per cent over the 12 months ending in August, the US Labour Department reported yesterday. That suggests that the pace of home construction, renovations and manufacturing will be plodding in the coming months, analysts said.

"I think the white paint index is signalling 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, remodelling or even getting a house ready to sell, they buy paint. About 1.6 billion litres of paint were sold last year, more than a third of it white.

The price for titanium dioxide tends to be volatile and should be viewed with caution, analysts say.

In July, prices fell 4 per cent over the year. That came after a 4.6 per cent drop in June, and a 5.1 per cent 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 US unemployment. It climbed to 9.7 per cent in August, a 26-year high, and is expected to top 10 per cent this year. That could crimp consumer spending, the single-biggest driver of national economic activity.

Economists predict industrial production will rise 0.6 per cent in August, up from a 0.5 per cent increase in July. The Federal Reserve is scheduled to release that report today.

The Cash for Clunkers programme, which gave car buyers a rebate for trading in their gas guzzlers, has lifted car sales and boosted production but the programme ended last month.

- AP