Good new this morning on trade. According to data from BEA, the U.S. trade deficit dropped by $7.2 billion in February to $35.4 billion. The bad news is that exports were down $3.0 billion and imports were down $10.2 billion. The slowdown in trade may be attributable to the bad weather and a West Coast dock strike. Interestingly, our deficit in petroleum products also dropped, due to falling oil prices.
However, our surplus in pure intangibles declined again slightly in February after a drop in January. Exports were down while imports were up. The surpluses in maintenance & repair services grew with an increase in export and a decline in imports. The surplus in financial services did just the opposite, declining as exports went down and imports up. The deficit in insurance services improved slightly. Net revenues from the use of intellectual property dropped slightly as revenues from foreign sources (exports) were up but charges for the use of intellectual property paid out to foreign sources (imports) increased more. The surplus in business services continued to grow a long string of declines last year.
Our Advanced Technology deficit once again improved in February to $3.1 billion. And once again the improvement was due improvement in the Information and Communications Technology (ICT) deficit as imports dropped by $2.3 billion even though exports were down $1 billion.
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 $11.8 billion in February compared with $9.9 billion in January. Again, much of this was due to the lower ICT imports.
Note: I am now reporting the trade data using the new BEA classifications for services trade, which breaks services into more categories. In the past, the intangible trade data was the sum of Royalties and License Fees and Other Private Services. Under the new classification system, intangibles trade data is the sum of the following items: maintenance and repair services n.i.e. (not included elsewhere); insurance services; financial services; charges for the use of intellectual property n.i.e.; telecommunications, computer, and information services; other business services.
Charges for the use of intellectual property n.i.e. is simply a renaming of Royalties and License Fees. This includes 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.
Maintenance and repair services n.i.e., financial services, and insurance services, were previously included in Other Private Services. Telecommunications, computer, and information services is a combination of those two items (telecommunications and computer & information services) that were also previously included in Other Private Services. Three categories previously in Other Private Services — education-related and health-related travel and the expenditures on goods and services by border, seasonal, and other short-term workers — were removed and reclassified to travel. The new category of other business services is a continuation of the older category Other Private Services with those components removed.
Thus, other business services includes categories such as advertising services; research, development, and testing services; management, consulting, and public relations services; legal services; construction, engineering, architectural, and mining services; and industrial engineering services. It also includes personal, cultural, and recreational services which includes fees related to the production of motion pictures, radio and television programs, and musical recordings; payments or receipts for renting audiovisual and related products, downloaded recordings and manuscripts; telemedicine; online education; and receipts or payments for cultural, sporting, and performing arts activities.
For more information on the changes, see the March 2014 Survey of Current Business article, “The Comprehensive Restructuring of the International Economic Accounts: Changes in Definitions, Classifications, and Presentations.”