Today was a kind of "double-witching hour", with both trade and employment data coming out. Employment growth was somewhat weak, with only 97,000 new jobs. But, this morning's overall BEA trade data is good – the monthly deficit is down.
However, the news on our trade in intangibles is not so good. First, our monthly surplus in January was essentially unchanged compared with December. Revenues from and payment of royalties were down while both exports and imports of private services were up.
The other not-so-good news was that last year’s figures were off by almost $1.4 billion – to the negative. This month’s revisions to the 2006 data show that our exports of private services were constantly overstated and our royalty payments (imports) constantly understated. As a result the revised intangibles surplus for 2006 was $98.3 billion rather than $99.7 billion. That is an error of only 1.5% - so in the greater scheme of things, it is not a major change. But, I always like to see revisions that show a better trade position rather than a worse one.
On the really bad news front, the Advanced Technology Products (ATP) deficit took a nose dive – back to the levels of recent months before December’s marked improvement. The January ATP deficit was almost $4.7 billion (compared with $2.2 billion in December, $4.5 billion in November and $4.8 billion in October. The January shift was due to declines in exports in aerospace technology and in information and communications technology. [Interestingly, the capitol goods account shows an increase in exports of civilian aircraft and computers.]
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.
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