Factory activity in Singapore sank to its lowest in three years, following similar weakness in several other countries.

Singapore's Purchasing Managers' Index (PMI), a key gauge of factory activity, came in at 49.5 for last month, indicating a contraction.

The weaker reading was caused by a drop in new orders and factory output, as well as a quickening pace of contraction in employment and new exports, said the Singapore Institute of Purchasing and Materials Management.

The latest reading has resurfaced talk of a technical recession in Singapore, and experts noted that hiring and capital expenditure could be hit as business sentiment suffers.

More pain for the global economy could lie ahead as the United States is set to impose US$7.5 billion (S$10.3 billion) of tariffs on exports from the European Union, including scotch whisky and cheese.