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November 9, 2006
September trade in intangibles
After last month's horrendous trade numbers, this morning's BEA trade data comes as a welcome relief. The overall deficit declined by $4.7 billion to $64.3 billion as imports declined and oil prices fell.
But, while this is good news, it is not great news. It just means that we are just digging ourselves into a deep hole at a slower rate.
Our trade in intangibles is helping to stem the tide - but not by very much. The intangibles surplus rose almost insignificantly by $44 million to $8.16 billion in September. The monthly surplus is still below what it was earlier this year. Imports and exports grew at about the same rate.
The deficit in Advanced Technology Products increased to $4.2 billion as imports outpaced exports, mainly due to an increase in aerospace imports.
Bottom line: pretty much of a status quo report. A little better, but nothing dramatic.
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 November 9, 2006 8:58 AM
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