Singapore's non-oil domestic exports fell 4.6 percent on the year in July, weakening sharply from the 12.9 percent increase recorded in May. Imports rose 8.1 on the year after no change previously.

The deterioration in headline growth in exports was largely driven by more pronounced weakness in demand from the United States, reflecting the ongoing impact of a higher tariff rate on Singapore imports. Exports to the United States fell 42.7 percent on the year after a previous decline of 4.8 percent, while exports to the China and Japan also fell on the year. Exports to the European Union, however, surged 77.1 percent after a previous decline of 23.6 percent, and exports to Hong Kong, South Korea and Taiwan all increased at a very strong pace.

Weaker growth in headline exports was broad-based across categories. Electronic exports rose 2.8 percent on the year in July, down from growth of 8.0 percent in June, while exports of non-electronic fell 6.6 percent after increasing 14.4 percent previously.

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.