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Recession Grinding Down Global Manufacturing

Factories in the world's largest economy are producing fewer goods than they have in nearly three decades - hit hard by the spreading global recession.

Friday's report by a private research group, the Institute for Supply Management, finds manufacturing activity in the United States has fallen to levels not seen since 1980, while prices sank to their lowest levels since 1949. 

The data comes after a series of reports showing similar cutbacks in emerging markets like China and India.

The Purchasing Managers' Index today says China is on the verge of "a technical recession" after its manufacturing activity fell for a fifth-straight month in December.

Factories in India - Asia's third largest economy - are also shedding jobs, prompting India's central bank to slash two key interest rates today.  Officials there have also introduced a second stimulus package to help spark the economy.

Manufacturing is also taking a hit in Europe, where a new report shows activity in the euro zone (countries that use the euro as their main currency) fell at its sharpest rate in more than a decade.

Meanwhile, oil prices are rising. Crude oil for future delivery gained almost four percent, to more than $46 a barrel during midday trading today in New York.

Some economists say the latest data could indicate another round of interest rate cuts might be on the way for Europe, where manufacturing activity in regional economic powers like Germany and France also hit record lows.

In Belarus, hit hard by the global financial crisis, officials let the value of the Belarusian ruble fall 20 percent in an attempt to make the country's economy more competitive.  Belarus is also expecting a $2.5 billion loan from the International Monetary Fund.

There is also troubling data Friday on the British housing market.  The country's biggest lender, Halifax, says home prices plunged at their fastest rate in 25 years in 2008.

South Korea's president says his government is now in "emergency mode."  And Singapore warns its economy could contract by as much as two percent.

Outgoing U.S. Treasury Secretary Henry Paulson tells the Financial Times today that global economic imbalances - and a failure to understand the impact emerging markets - are to blame for the current financial crisis.

Some information for this report was provided by AFP, AP and Reuters.

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