May trade in intangibles

Today’s trade data from BEA continues to point to a mixed economy, at least as of a couple of months ago. The deficit grew by $4.9 billion to $45.0 billion in May. Falling back into a bad habit, exports were down while imports were up. And although the deficit in petroleum goods increased, the deficit in non-petroleum goods grew by a larger amount. So it looks like a re-run of the old story of US demand (imports) feeding a slower world economy.
And the same song repeats for our pure intangibles trade surplus. Exports of business services rose slightly more than imports and royalty receipts (exports) rose slightly more than royalty payments (imports). As a result, the intangibles surplus grew slightly by $144 million in May to $15.7 billion
The deficit in Advanced Technology goods also had a very slight improvement after last month’s huge surge. The May deficit was down to $7.1 billion in May from almost $7.9 billion in April. 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.
Advanced Technology goods also represent trade in intangibles. These goods are competitive because their value is based on knowledge and other intangibles. While not a perfect measure, Advanced Technology goods serve as a good approximation of our trade in embedded intangibles. Adding the pure and embedded intangibles reveals an overall surplus of $8.5 billion
Intangibles trade-May13.png
Intangibles and goods-May13.png
Oil good intangibles-May13.png

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.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s