July trade in intangibles

Good news on the July trade deficit released this morning: the deficit dropped by $6.8 billion to $44.8 billion, far better than economist had expected. Exports rose by $6.2 billion while imports dropped by $0.5 billion. The deficits in both goods and petroleum improved.
Our intangibles trade surplus increase ever so slightly as well in July – up by $93 million. Exports of both business services and royalties increased. Imports of business services were down slightly, while royalties paid out (imports) were up slightly.
However, our deficit in advanced technology gods increased slightly in July by $309 million. Both exports and imports declined, with exports falling slightly more than imports. The aerospace and biotechnology sectors saw the biggest declines. 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.
This being the first report of the second half of 2011, the data contains the revisions for the first half of 2011. The revisions show that our intangibles surplus for January through June was greater than originally reported. Exports were larger each month in the period and imports smaller during April, May and June. Interestingly, while imports of business services were revised downward, royalty imports (royalties paid out) were revised upward. The biggest upward revisions were to royalty export (royalty income), by almost 5% in June 2011.
Intangibles trade-Jul11.gif
Intangibles and goods-Jul11.gif
Oil good intangibles-Jul11.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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