November trade in intangibles

Following on the recent good news about GDP comes this morning’s release of the November trade data from BEA showing a $3.2 billion drop in the deficit. The decline to $39.0 billion in November was due to a $2.0 billion drop in exports and a $5.2 billion drop in imports. The decline surprised economists, who had expected the deficit to come in at $42 billion. The improvement was due to a lower deficit in petroleum goods as a result of lower oil prices — a situation we should see continuing to show up in future trade data. The deficit in non-petroleum goods actually increased slightly.
Unfortunately, as the chart below shows, the trend line for the deficit in non-petroleum goods has been steadily downward. But a large part of the increased non-petroleum goods deficit was due to a big jump in our Advanced Technology deficit — up $2.2 billion to $11.4 billion in November. The increased deficit was due to a spike in information and communications technology (ICT) imports — most likely due to pre-Christmas ordering. The good news is that without this increase in ICT imports, the deficit in non-petroleum goods would have declined.
Our surplus in pure intangibles, however, was basically unchanged in November at a level of $14.4 billion as imports grew only slightly more that exports. The surpluses in maintenance & repair services improved while the deficit in insurance services continued to increase and the surplus in financial services declined. The surplus in business services again declined, for the 10th month in a row. Exports of business services continue to grow but imports of those services grew even faster. Net revenues from the use of intellectual property increased as revenues from foreign sources (exports) grew faster than charges for the use of intellectual property paid out to foreign sources (imports).
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 shows an overall surplus of $3.0 billion in November, up from $5.3 billion in October. Again, much of this was due to the increase in ICT imports.
Intangibles trade-Nov14.png
Intangibles trade parts-Nov14.png
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Oil goods intangibles-Nov14.png

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