« Nobel thinking | Main | Is China the future of the service business? »
October 12, 2006
August trade in intangibles
This morning's BEA trade data shows our overall trade deficit for August increasing by $1.9 billion to a record $69.9 billion. An increase of $2.7 billion in exports was more than swamped by a $4.6 billion rise in imports. According to BEA:
The July to August change in exports of goods reflected increases in capital goods ($1.3 billion); industrial supplies and materials ($0.5 billion); other goods ($0.4 billion); foods, feeds, and beverages ($0.4 billion); and consumer goods ($0.2 billion). A decrease occurred in automotive vehicles, parts, and engines ($0.1 billion).The July to August change in imports of goods reflected increases in industrial supplies and materials ($2.0 billion); capital goods ($1.0 billion); consumer goods ($0.7 billion); automotive vehicles, parts, and engines ($0.5 billion); foods, feeds, and beverages ($0.2 billion); and other goods ($0.2 billion).
However, there was better news concerning our trade in intangibles. The intangibles surplus rose slightly by almost $200 million to $8.1 billion in August, due mostly to an increase in royalty payments from abroad (exports) and a slight decrease in royalty payments to others (imports). Exports and imports of business services increased at about the same rate (for an improvement in the surplus of $10 million). Incoming royalty payments and exports and imports of business services are at record levels.
Bottom line is that trade in intangibles is increasing, but the surplus is growing too slowly to offset our huge deficit in goods trade.
The deficit in Advanced Technology Products dropped by a billion dollars to $3.6 billion. The improvement was due to increased exports in aerospace, reversing last month’s sharp decline in that volatile sector. However, the August deficit in these sectors is still significantly worse than the average for the first six months of the year.
Note: we define trade in intangibles as the sum of "royalties and license fees" and "other private services". The BEA/Census Bureau definitions of those categories are as follows:
Royalties and License Fees - Transactions with foreign residents involving intangible assets and proprietary rights, such as the use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, and manufacturing rights. The term "royalties" generally refers to payments for the utilization of copyrights or trademarks, and the term "license fees" generally refers to payments for the use of patents or industrial processes.
Other Private Services - Transactions with affiliated foreigners, for which no identification by type is available, and of transactions with unaffiliated foreigners. (The term "affiliated" refers to a direct investment relationship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise's voting securities or the equivalent, or when a foreign person has a similar interest in a U.S. enterprise.) Transactions with unaffiliated foreigners consist of education services; financial services (includes commissions and other transactions fees associated with the purchase and sale of securities and noninterest income of banks, and excludes investment income); insurance services; telecommunications services (includes transmission services and value-added services); and business, professional, and technical services. Included in the last group are advertising services; computer and data processing services; database and other information services; research, development, and testing services; management, consulting, and public relations services; legal services; construction, engineering, architectural, and mining services; industrial engineering services; installation, maintenance, and repair of equipment; and other services, including medical services and film and tape rentals.
Posted by Ken Jarboe at October 12, 2006 8:52 AM
Trackback Pings
TrackBack URL for this entry:
http://www.athenaalliance.org/mt/mt-tb.cgi/935