September trade in intangibles

The September trade data released this morning showed a slight improvement. The monthly trade deficit declined to $44.0 billion from $46.5 billion in August. This was slightly better than the $45 billion analysts had predicted. The good news was that exports increased and imports declined. As the chart below shows, the deficit in petroleum goods was generally unchanged (down $400 million) while the deficit in non-petroleum goods declined by $2 billion.
Our intangibles trade surplus was basically unchanged as well, rising ever so slightly by $70 million. Exports and imports of private services both increased — as did royalty payments coming in (exports) and royalty payments going out (imports).
However, our deficit in Advanced Technology Products grew in September. Exports grew by over $1 billion but imports increased by over $1.3 billion. The result was another record setting deficit as September was the worst monthly deficit since the government started publishing data specifically on Advanced Technology Products. June, August and now September have all set records. Aerospace exports picked back up slightly from last month — but so did imports. Electronics saw a reversal with exports dropping and imports increasing. In fact, imports increased in every category except biotechnology and flexible manufacturing. 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 trade-Sept10.gif
Intangibles and goods-Sept10.gif
Oil good intangibles-Sept10.gif

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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