Singapore's non-oil domestic exports fell 3.5 percent on the year in May after advancing 12.4 percent in April, while imports fell 0.5 percent after increasing 6.9 percent previously. This weakness in trade flows in May after strength in April appears to reflect the impact of the recent escalation in global trade tensions. Respondents to the PMI survey for Singapore had reported that there was some front-loading of export orders in April ahead of expected tariff increases, with the May survey then showing weaker conditions. The weakness in exports reported today is consistent with that survey evidence.

Weaker growth in headline exports was broad-based across categories. Electronic exports rose 1.7 percent on the year in May, slowing sharply after surging 58.5 percent in April, while exports of non-electronic fell 5.3 percent after increasing 9.3 percent previously. Performance was mixed across major trading partners. Exports to the United States fell 20.6 percent on the year, with exports to China, Japan and the European Union also falling on the year. This, however, was partly offset by strong growth in exports to Taiwan and a solid increase in exports to South Korea.

Singapore publishes monthly data (both in nominal and real terms) for the current and previous two months, cumulative-to-date data on imports and exports by country of origin and destination, as well as monthly seasonally adjusted trade data. Imports refer to goods brought into Singapore irrespective of whether they are for consumption, for processing, for use in manufacturing, or for subsequent re-shipment to other countries/areas. Exports refer to goods brought out of Singapore. They comprise domestic exports and re-exports. Data are also disseminated on imports broken down by country of origin and domestic exports and re-exports broken down by country of destination.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they also affect currency values in foreign exchange markets. However, the foreign exchange impact is muted here given that Singapore’s currency is managed by the central bank.

Imports indicate demand for foreign goods and services in the local economy. Exports show the demand for local goods in countries overseas. Movements in the trade balance directly affect GDP growth because of the Singapore’s dependence on trade. Stronger exports are bullish for corporate earnings and the stock market. The bond market is also sensitive to the risk of importing inflation.

This report also gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.