July trade in intangibles – and revisions

The US trade deficit was essentially unchanged in July, according to data released this morning from the BEA. The July deficit was $42.0 billion compared to June’s (revised) deficit of $41.9 billion. The number is somewhat good news: economists had been expecting a deficit of $44 billion. More worrisome was that both exports and imports we down. Exports dropped by $1.9 billion while imports were down by $1.8 billion. This is confirmation that the economic slowed somewhat in July. The mixed news is that our deficit in petroleum goods & oil declined but our non-petroleum goods deficit increased — with exports of non-petroleum goods dropping while imports rose.
Also mixed news is that our trade surplus in intangibles declined in July by over $290 million. However, that decline was concentrated in royalty payments reflecting the payments for the broadcast rights to the Summer Olympics. The surplus in business services increased slightly as exports grew faster than imports.
The bad news is that our deficit in Advanced Technology Products increased by almost $1 billion in July — reversing June’s decline in the deficit. Almost every category saw a worsening of the trade balance except for information and communications technology (ICT) where imports were down more than the drop in exports. 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.
Today’s data also contains revisions for the first half of 2012. Royalty imports and exports revised downward. Business services exports were revised upwards and imports revised downward, both by significant amounts. As a result, the surplus was revised upwards by over a $1 billion in June and close to that amount in the other months of 2012. It is unclear the reason for the size of the revision, other than it incorporates monthly data which tends to be more comprehensive when it comes to business services.
Intangibles trade-Jul12.gif
Intangibles and goods-Jul12.gif
Oil good intangibles-Jul12.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.

One thought on “July trade in intangibles – and revisions”

  1. Mainstreaming intangibles – not yet

    Two stories in the past 24 hours are an interesting indication of how intangible assets are become part of mainstream economic activity (both macro and micro). One story in the New York Times (“With Smartphone Deals, Patents Become a New…


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