The September trade data from BEA, released this morning, showed an increased in the deficit to $36.5 billion, up from August's revised deficit of $30.8 billion. The deficit was greater than expected. According to the Wall Street Journal, "Economists surveyed by Dow Jones Newswires had expected the September deficit would widen to just $32 billion." The increase was due to imports growing much faster than exports. The deficit increased for both petroleum and non-petroleum products as imports surged. This reverses the trend toward an improving trade deficit that occurred during the recession. Thus, it raises the concern that the economic downturn may not have any lasting impact on the trade deficit. As a side note, it probably also means that the 3rd quarter GDP numbers may be revised downward, as a deficit counts as a negative on economic growth.
Our intangibles trade surplus was essentially unchanged. As was the case in August, exports and imports of both business services and royalties rose. But, once again, the increases was so slight that the intangible trade balance has essentially remained unchanged for the past 8 months -- hovering at about $11.1 billion.
Our deficit in Advanced Technology Products also worsened slightly with the September deficit rising to almost $6 billion. Increased exports in aerospace were more than offset by increased imports of biotechnology, life sciences, information and communications technologies, and optoelectronics. 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.
Our intangibles trade surplus was essentially unchanged. As was the case in August, exports and imports of both business services and royalties rose. But, once again, the increases was so slight that the intangible trade balance has essentially remained unchanged for the past 8 months -- hovering at about $11.1 billion.
Our deficit in Advanced Technology Products also worsened slightly with the September deficit rising to almost $6 billion. Increased exports in aerospace were more than offset by increased imports of biotechnology, life sciences, information and communications technologies, and optoelectronics. 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.
Intangibles versus Goods
>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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