August trade in intangibles

The delayed trade numbers for August are out and show a status quo economy. The deficit dropped by a slight amount ($0.2 billion) to $38.8 billion while exports dropped by $0.1 billion and imports were unchanged. Economists had forecast a rise in the deficit to $39.4 billion.
Our trade surplus in pure intangibles reflected the overall trend, staying a $16.1 billion. Exports and imports of business services both rose slightly while royalty receipts (exports) and royalty payments (imports) both declined slightly.
The good news is that the Advanced Technology deficit dropped to $5.9 billion from July’s $8.3 billion. The positive trend was generally across the board, with aerospace and information and communications technology showing the biggest improvements.
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 an approximation of our trade in embedded intangibles. Adding the pure and embedded intangibles reveals an overall surplus of $10.2 billion in August, compared to $7.9 billion in July.
Intangibles trade-Aug13.png
Intangibles and goods-Aug13.png
Oil goods intangibles-Aug13.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.

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