The trade deficit took an unexpected turn for the better in August, according to the latest data from BEA. The combination of rising exports and falling imports reduced the deficit to $30.7 billion, compared to $31.9 billion in July. According to the Wall Street Journal, "Economists surveyed by Dow Jones Newswires had expected a further widening in the deficit to $33.6 billion." This is good news if the overall trend continues. However, the August improvement was due to declines in petroleum goods. The deficit in non-petroleum goods actually worsened. Nor was the increase in exports a completely good news story. Exports of capital good and consumer goods declined. Most of the rise in overall exports was due to the automotive sector and industrial supplies.
Our intangibles trade surplus also edged up slightly by $120 million. Exports and imports of both business services and royalties rose in August. The increase was so slight, however, that the intangible trade balance has essentially remained unchanged for the past 7 months -- hovering at about $11.1 billion.
Our deficit in Advanced Technology Products also improved, dropping to $5.6 billion in August from almost $6.6 billion in July. The bad news is that the improvement was due to a drop in imports, which declined faster than the drop in exports. This is especially true on information and communications technologies and aerospace where both imports and exports declined significantly. 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.
Our intangibles trade surplus also edged up slightly by $120 million. Exports and imports of both business services and royalties rose in August. The increase was so slight, however, that the intangible trade balance has essentially remained unchanged for the past 7 months -- hovering at about $11.1 billion.
Our deficit in Advanced Technology Products also improved, dropping to $5.6 billion in August from almost $6.6 billion in July. The bad news is that the improvement was due to a drop in imports, which declined faster than the drop in exports. This is especially true on information and communications technologies and aerospace where both imports and exports declined significantly. 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.
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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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