This morning’s BEA trade data for January had some welcome news that the deficit declined slightly to $37.3 billion, down from the revised December level of $39.9 billion. Both imports and exports declined. That does not speak well for the health of the recovery. The largest decreases in import were in automotive vehicles, capital goods, and consumer goods. Oil imports also dropped dramatically. According to the Wall Street Journal, economists had expected the deficit to rise to $41 billion.
Our trade surplus in intangibles also improved in January, growing slightly to $12.3 billion. Unlike the overall trade flows, both exports and imports of intangibles increased, with exports rising slightly faster than imports.
Our deficit in Advanced Technology Products also decreased in January, down to $3.3 billion from December’s $4.9 billion. The details reveal, however, that this is not necessarily due to good news. The improvement was due to $2.7 billion drop in imports of information and communications technologies. Exports of aerospace technologies and information and communications technologies declined substantially. And BEA and the Census Bureau note that exports were over stated by $558 million because of non-disclosure requirements. 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.
The other news is that the 2009 data has been revised. The new data shows higher levels of exports and lower levels of imports in the second half of the year. As a result, the intangibles trade surplus for 2009 is $4 billion higher than previously reported.
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.