The May trade figures were released by BEA this morning and there is some good news. Exports increased, imports dropped and the overall deficit declined by $2.8 billion to $26.0 billion. Economist has expected that the deficit would widen slightly due to rising oil prices. As the Wall Street Journal reports, the news on the energy front was mixed:
The U.S. bill for crude oil imports fell to $13.41 billion from $13.63 billion the month before despite a continued rise in oil prices. The average price per barrel climbed $4.61 to $51.21. Crude import volumes fell to 261.89 million barrels from 292.60 million.
The U.S. paid $17.70 billion for all types of energy-related imports, up from $17.40 billion in April.
Our intangibles trade surplus moved ever so slightly in the wrong direction, however. The surplus was $11.62 billion in May compared to $11.67 (revised) in April. Both exports and imports of private business services were up while both inflows (exports) and outflows (imports) of royalty payments were down. The intangibles trade surplus has been essentially flat for the past 6 months.
Our deficit in Advanced Technology Products improved somewhat after surging in April. The May deficit was $3.6 billion - down from April's $4.7 billion but still higher than in the first three months of the year. Of course, that is still half of the over $7 billion monthly deficits we were running last summer. Imports were generally down and exports up - a good sign. The major exceptions, however, were in information and communications technologies and opto-electronics, where exports dropped, imports grew and the deficit got worse. This data is however subject to revision as a footnote in the BEA tables discusses - due to non-disclosure requirements. The level of exports may be overstated by $455 million. The last monthly surplus in Advanced Technology Products was in June 2002 and the last sustained series of monthly surpluses were in the first half of 2001.
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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