Price of white paint component dips at slower pace

[July 15, 2009]  WASHINGTON (AP) -- The price of a key ingredient in white paint is declining at a slower pace, a signal that the weakness in housing and factory activity should let up a bit.

Titanium dioxide prices fell 4.6 percent over the 12 months ending in June, the Labor Department reported Tuesday. That suggests the pace of home construction, renovations and manufacturing will be subdued in the coming months but a bit stronger than they have been, economists said.

The third straight month of smaller price drops for titanium dioxide also means the recession has eased, analysts said. In May, prices fell 5.1 percent over the year, after a 5.7 percent decline in April.

Economists track titanium dioxide as a barometer of the country's overall financial health. When people are building homes, remodeling or even getting a house ready to sell, they buy paint. About 419 million gallons of paint were sold last year, and more than a third of it was white.

White paint is used on a wide variety of manufactured goods, including cars and household appliances. Many economists expect the decline in industrial production in June won't be as steep as it was in May. The Federal Reserve releases that report on Wednesday.

Housing activity, meanwhile, was expected to clock in at a pace of 530,000 in June, slightly less than May's annualized pace of 532,000, economists say. Building permits are expected to rise to a pace of 520,000, up from 518,000. The government releases that report on Friday.

The price for titanium dioxide, which is not seasonally adjusted, tends to be volatile and should be viewed with caution, economists say.

There have been signs that the recession, which started in December 2007 and is the longest since World War II, has abated.

Most economists predict the economy didn't sink nearly as much in the April-June quarter as it had in the prior six months, which was the worst performance in 50 years. Many also believe the economy could start growing again in the current quarter, but any recovery is expected to be slow and accompanied by rising unemployment.

[Associated Press; By JEANNINE AVERSA]

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