This morning's BEA trade data was looking pretty good as the overall deficit declined by $5.4 billion to $58.9 billion. Once again, imports declined and oil prices fell.
The surplus in intangibles increased by a healthy $169 million in October as earnings from royalties (exports) and exports of private services increased. Imports of private services also increased, but not as much as exports. Royalties paid out (imports) decreased.
The figures show a major revision in the services trade data. The revisions for April through September 2006 show, on balance, a higher level of intangible exports and a lower lever of imports. However, royalties earnings (exports) were significantly reduced in July, August and September (by $134 million, $164 million and $194 million, respectively).
Unfortunately, the deficit in Advanced Technology Products continued to increase by $640 million to $4.8 billion as imports outpaced exports. Imports of information and communications equipment saw the biggest increase.
All in all, a good report. But not great.
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.