FOR WIRE TRANSMISSION: 10:00 A.M. EDT, TUESDAY, SEPTEMBER 14, 1999 Douglas B. Weinberg: (202) 606-9590 BEA 99-27 Recorded Message: 606-5362 U.S. International Transactions: Second Quarter 1999 Current account The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--increased to $80.7 billion in the second quarter from $68.7 billion (revised) in the first, according to preliminary estimates of the Commerce Department's Bureau of Economic Analysis. The increase was accounted for by a large increase in the deficit on goods and services, a very small increase in the deficit on income, and higher net unilateral current transfers. Goods and services The deficit on goods and services increased to $65.0 billion in the second quarter from $54.0 billion in the first. Goods The deficit on goods increased to $84.6 billion in the second quarter from $74.2 billion in the first. Goods exports increased to $165.7 billion from $164.3 billion. The increase was accounted for by increases in nonagricultural industrial supplies and materials, in automotive products, and in agricultural products. Goods imports increased to $250.3 billion from $238.5 billion. The increase was accounted for by widespread increases in nonpetroleum products and by a surge in petroleum products, largely as a result of a sharp increase in petroleum prices. Services The surplus on services decreased to $19.6 billion in the second quarter from $20.2 billion in the first. Service receipts increased to $68.9 billion from $67.6 billion, as a result of increases in all private service categories. Service payments increased to $49.2 billion from $47.4 billion. The increase was largely accounted for by increases in "other" private services, in "other" transportation, in passenger fares, and in travel. Income The deficit on income edged up to $4.4 billion in the second quarter from $4.3 billion in the first. Investment income Income receipts on U.S.-owned assets abroad increased to $66.5 billion from $63.6 billion. The increase was accounted for by increases in direct investment receipts and in "other" private receipts. Income payments on foreign-owned assets in the United States increased to $69.6 billion from $66.5 billion. The increase was largely accounted for by an increase in direct investment payments; "other" private payments and U.S. Government payments also increased. Compensation of employees Receipts for compensation of U.S. workers abroad were unchanged at $0.5 billion. Payments for compensation of foreign workers in the United States decreased slightly to $1.8 billion from $1.9 billion. Unilateral current transfers Net unilateral current transfers were $11.3 billion in the second quarter, compared with $10.3 billion in the first. The increase was accounted for by increases in U.S. Government grants and in private remittances and other transfers. Capital and financial account Capital account Net capital account transactions were unchanged at $0.2 billion. Financial account Net recorded financial inflows--the difference between changes in U.S.-owned assets abroad and changes in foreign-owned assets in the United States--were $116.9 billion in the second quarter, up from $73.7 billion (revised) in the first. The step-up was accounted for by a greater strengthening in financial inflows for foreign-owned assets in the United States than in financial outflows for U.S.-owned assets abroad. U.S.-owned assets abroad U.S.-owned assets abroad increased $124.2 billion in the second quarter, following an increase of $15.1 billion in the first. U.S. claims on foreigners reported by U.S. banks increased $37.1 billion in the second quarter, in contrast to a decrease of $27.8 billion in the first. The increase was largely the result of lending by foreign-owned banks in the United States to banks in Western Europe. U.S. transactions in foreign securities shifted to net U.S. purchases of $26.4 billion in the second quarter from net U.S. sales of $8.1 billion in the first. U.S. transactions in foreign stocks shifted to net U.S. purchases of $31.2 billion from net U.S. sales of $8.3 billion, as a result of exchanges of stock that were related to acquisitions of U.S. companies by foreign companies. Excluding these exchanges of stock, net U.S. sales of foreign stocks were roughly twice as large in the second quarter as in the first. Net U.S. transactions in foreign bonds shifted to net U.S. sales of $4.8 billion from net U.S. purchases of $0.2 billion. Net financial outflows for U.S. direct investment abroad were $35.0 billion in the second quarter, down from $41.4 billion in the first. Slowdowns in net equity capital outflows and in net intercompany debt outflows were partly offset by a step-up in reinvested earnings. U.S. official reserve assets decreased $1.2 billion in the second quarter, following a decrease of $4.1 billion in the first. Foreign-owned assets in the United States Foreign-owned assets in the United States increased $241.0 billion in the second quarter, following an increase of $88.9 billion in the first. Net financial inflows for foreign direct investment in the United States were $118.6 billion in the second quarter, up sharply from $22.9 billion in the first. The step-up was attributable to a surge in net equity capital inflows, as a result of several large acquisitions of U.S. companies by foreign companies. Net intercompany debt inflows and reinvested earnings both decreased. U.S. liabilities to foreigners reported by U.S. banks, excluding U.S. Treasury securities, increased $49.4 billion in the second quarter, in contrast to a decrease of $14.2 billion in the first. The increase was partly the result of borrowing by U.S. banks to finance the increase in U.S. bank lending abroad. Net foreign purchases of U.S. securities other than U.S. Treasury securities increased to a record $77.3 billion in the second quarter from $61.5 billion in the first. Net foreign purchases of U.S. stocks surged to $28.8 billion from $8.8 billion, and net foreign purchases of U.S. corporate and other bonds decreased to $48.5 billion from $52.7 billion. Net foreign sales of U.S. Treasury securities decreased to $5.5 billion in the second quarter from net sales of $8.8 billion in the first. Second-quarter net foreign sales were partly attributable to a decline in U.S. Treasury securities prices. Net U.S. currency shipments were $3.1 billion in the second quarter, up from $2.4 billion in the first. Foreign official assets in the United States decreased $1.0 billion in the second quarter, in contrast to an increase of $4.7 billion in the first. The decrease was more than accounted for by a decrease in assets of non-OPEC developing countries. The statistical discrepancy--errors and omissions in recorded transactions--was a negative $36.4 billion in the second quarter, compared with a negative $5.2 billion in the first. In the second quarter, the U.S. dollar appreciated 2 percent on a trade-weighted quarterly average basis against a group of 7 major currencies. Revisions The first-quarter international transactions accounts are revised from previously published estimates. The current-account deficit for the first quarter was revised to $68.7 billion from $68.6 billion. The goods deficit was unchanged from the previous estimate; the services surplus was revised to $20.2 billion from $20.4 billion; the deficit on income was revised to $4.3 billion from $4.7 billion; and net unilateral current transfers were revised to $10.3 billion from $10.1 billion. Net recorded financial inflows were revised to $73.7 billion from $84.1 billion. * * * Release dates for 1999 and 2000: Third quarter 1999....................................................December 14, 1999 (Tuesday) Fourth quarter and year 1999...........................................March 15, 2000 (Wednesday) First quarter 2000........................................................June 20, 2000 (Tuesday) Second quarter 2000................................................September 13, 2000 (Wednesday) Third quarter 2000...................................................December 14, 2000 (Thursday) * * * BEA's major national, regional, international, and industry estimates, the Survey of Current Business, and BEA news releases are available on BEA's web site: www.bea.doc.gov STAT-USA maintains an Internet site that contains BEA estimates, BEA news releases, and the Survey of Current Business. The information available through STAT-USA is often more detailed and more timely than that available from other sources. To subscribe to STAT-USA's World Wide Web system, go to www.stat-usa.gov. Subscriptions for single-user unlimited access to STAT-USA's Internet information are $50.00 for 3 months or $150.00 for 1 year. For further information, call (202) 482-1986. Summary BEA estimates are available on recorded messages at the time of public release at the following telephone numbers: (202) 606-5362 U.S. international transactions -5306 Gross domestic product -5303 Personal income and outlays Most of BEA's estimates and analyses appear in the Survey of Current Business, BEA's monthly journal. The printed Survey of Current Business is available from the Superintendent of Documents, U.S. Government Printing Office, Washington D.C. 20402. First class mail: Annual subscription $104.00 domestic. 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September 14, 1999 Table 1.--U.S. International Transactions [Millions of dollars, quarters seasonally adjusted] 1998 1999 Change: (Credits +, debits -) 1998 1999 I II III IV Ir IIp I-II Current account 1 Exports of goods and services and income receipts............................... 1,192,231 302,289 298,463 291,493 299,985 295,932 301,539 5,607 2 Exports of goods and services.............................................. 933,907 235,831 231,889 229,284 236,904 231,904 234,526 2,622 3 Goods, balance of payments basis 1/.................................... 670,246 170,665 165,198 164,259 170,124 164,292 165,674 1,382 4 Services 2/............................................................ 263,661 65,166 66,691 65,025 66,780 67,612 68,852 1,240 5 Transfers under U.S. military agency sales contracts............... 17,155 4,606 4,489 3,979 4,081 4,340 4,234 -106 6 Travel............................................................. 71,250 17,903 18,260 17,149 17,938 18,138 18,374 236 7 Passenger fares.................................................... 19,996 4,916 5,185 5,052 4,843 4,995 5,240 245 8 Other transportation............................................... 25,518 6,338 6,268 6,339 6,575 6,501 6,715 214 9 Royalties and license fees........................................ 36,808 8,882 9,002 9,029 9,894 9,337 9,396 59 10 Other private services............................................ 92,116 22,302 23,296 23,278 23,240 24,095 24,649 554 11 U.S. Government miscellaneous services............................ 818 219 191 199 209 206 244 38 12 Income receipts............................................................ 258,324 66,458 66,574 62,209 63,081 64,028 67,013 2,985 13 Income receipts on U.S.-owned assets abroad........................... 256,467 65,994 66,111 61,744 62,617 63,558 66,542 2,984 14 Direct investment receipts........................................ 102,846 27,338 26,744 23,124 25,639 26,910 28,466 1,556 15 Other private receipts............................................ 150,001 37,826 38,412 37,744 36,019 35,760 37,274 1,514 16 U.S. Government receipts.......................................... 3,620 830 955 876 959 888 802 -86 17 Compensation of employees............................................. 1,857 464 463 465 464 470 471 1 18 Imports of goods and services and income payments............................... -1,368,718 -335,380 -340,977 -344,182 -348,180 -354,246 -370,937 -16,691 19 Imports of goods and services.............................................. -1,098,189 -269,169 -273,850 -275,008 -280,166 -285,878 -299,542 -13,664 20 Goods, balance of payments basis 1/.................................... -917,178 -225,541 -228,698 -229,228 -233,711 -238,495 -250,320 -11,825 21 Services 2/............................................................ -181,011 -43,628 -45,152 -45,780 -46,455 -47,383 -49,222 -1,839 22 Direct defense expenditures........................................ -12,841 -3,098 -3,061 -3,276 -3,406 -3,503 -3,600 -97 23 Travel............................................................. -56,105 -13,736 -14,168 -14,070 -14,131 -14,847 -14,995 -148 24 Passenger fares.................................................... -19,797 -4,629 -4,958 -5,085 -5,125 -5,114 -5,316 -202 25 Other transportation............................................... -30,457 -7,321 -7,590 -7,700 -7,849 -7,726 -8,290 -564 26 Royalties and license fees........................................ -11,292 -2,955 -2,694 -2,721 -2,923 -3,176 -3,242 -66 27 Other private services............................................ -47,670 -11,217 -12,014 -12,163 -12,276 -12,335 -13,050 -715 28 U.S. Government miscellaneous services............................ -2,849 -672 -667 -765 -745 -682 -729 -47 29 Income payments............................................................ -270,529 -66,211 -67,127 -69,174 -68,014 -68,368 -71,395 -3,027 30 Income payments on foreign-owned assets in the United States.......... -263,423 -64,476 -65,376 -67,381 -66,188 -66,504 -69,553 -3,049 31 Direct investment payments........................................ -43,441 -10,501 -10,567 -11,290 -11,081 -12,076 -14,363 -2,287 32 Other private payments............................................ -128,863 -31,292 -31,849 -33,314 -32,408 -31,759 -32,035 -276 33 U.S. Government payments.......................................... -91,119 -22,683 -22,960 -22,777 -22,699 -22,669 -23,155 -486 34 Compensation of employees............................................. -7,106 -1,735 -1,751 -1,793 -1,826 -1,864 -1,842 22 35 Unilateral current transfers, net............................................... -44,075 -9,927 -9,886 -10,787 -13,474 -10,340 -11,275 -935 36 U.S. Government grants..................................................... -13,057 -2,340 -2,168 -2,807 -5,742 -2,200 -2,802 -602 37 U.S. Government pensions and other transfers............................... -4,350 -1,079 -1,095 -1,106 -1,071 -1,104 -1,110 -6 38 Private remittances and other transfers.................................... -26,668 -6,508 -6,623 -6,874 -6,661 -7,036 -7,363 -327 September 14, 1999 Table 1.--U.S. International Transactions (Continued) [Millions of dollars, quarters seasonally adjusted] 1998 1999 Change: (Credits +, debits -) 1998 1999 I II III IV Ir IIp I-II Capital and financial account Capital account 39 Capital account transactions, net............................................... 617 143 160 148 166 166 180 14 Financial account 40 U.S.-owned assets abroad, net (increase/financial outflow (-)).................. -292,818 -59,599 -120,517 -62,097 -50,607 -15,148 -124,161 -109,013 41 U.S. official reserve assets, net........................................... -6,784 -444 -1,945 -2,026 -2,369 4,068 1,159 -2,909 42 Gold................................................................... .... .... .... .... .... .... .... .... 43 Special drawing rights................................................. -149 -182 72 188 -227 563 -190 -753 44 Reserve position in the International Monetary Fund.................... -5,118 -85 -1,031 -2,078 -1,924 3 1,413 1,410 45 Foreign currencies..................................................... -1,517 -177 -986 -136 -218 3,502 -64 -3,566 46 U.S. Government assets, other than official reserve assets, net............. -429 -81 -483 185 -50 119 -380 -499 47 U.S. credits and other long-term assets................................ -4,676 -1,192 -1,156 -1,285 -1,043 -1,304 -2,063 -759 48 Repayments on U.S. credits and other long-term assets.................. 4,102 1,133 699 1,332 938 1,545 1,866 321 49 U.S. foreign currency holdings and U.S. short-term assets, net......... 145 -22 -26 138 55 -122 -183 -61 50 U.S. private assets, net.................................................... -285,605 -59,074 -118,089 -60,256 -48,188 -19,335 -124,940 -105,605 51 Direct investment...................................................... -132,829 -37,300 -43,172 -21,586 -30,773 -41,385 -35,042 6,343 52 Foreign securities..................................................... -102,817 -14,116 -32,886 14,994 -70,809 8,132 -26,387 -34,519 53 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.......................................... -25,041 -6,596 -14,327 -20,320 16,202 -13,853 -26,429 -12,576 54 U.S. claims reported by U.S. banks, not included elsewhere............. -24,918 -1,062 -27,704 -33,344 37,192 27,771 -37,082 -64,853 55 Foreign-owned assets in the United States, net (increase/financial inflow (+)).. 502,637 96,817 162,466 93,547 149,805 88,860 241,047 152,187 56 Foreign official assets in the United States, net........................... -21,684 11,004 -10,551 -46,489 24,352 4,708 -986 -5,694 57 U.S. Government securities............................................. -3,625 13,946 -20,064 -30,905 33,398 6,793 -916 -7,709 58 U.S. Treasury securities........................................... -9,957 11,336 -20,318 -32,811 31,836 800 -6,708 -7,508 59 Other.............................................................. 6,332 2,610 254 1,906 1,562 5,993 5,792 -201 60 Other U.S. Government liabilities...................................... -3,113 -1,028 -807 -224 -1,054 -1,594 -770 824 61 U.S. liabilities reported by U.S. banks, not included elsewhere........ -11,469 -958 9,488 -12,866 -7,133 -589 1,202 1,791 62 Other foreign official assets.......................................... -3,477 -956 832 -2,494 -859 98 -502 -600 63 Other foreign assets in the United States, net.............................. 524,321 85,813 173,017 140,036 125,453 84,152 242,033 157,881 64 Direct investment...................................................... 193,375 27,016 20,946 24,906 120,505 22,949 118,557 95,608 65 U.S. Treasury securities............................................... 46,155 -2,557 25,759 -1,438 24,391 -8,781 -5,517 3,264 66 U.S. securities other than U.S. Treasury securities.................... 218,026 76,810 71,785 20,103 49,328 61,540 77,272 15,732 67 U.S. currency.......................................................... 16,622 746 2,349 7,277 6,250 2,440 3,057 617 68 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns......................................... 9,412 32,707 18,040 11,875 -53,210 20,188 -710 -20,898 69 U.S. liabilities reported by U.S. banks, not included elsewhere........ 40,731 -48,909 34,138 77,313 -21,811 -14,184 49,374 63,558 70 Statistical discrepancy (sum of above items with sign reversed)................. 10,126 5,657 10,291 31,878 -37,695 -5,224 -36,393 -31,169 Memoranda: 71 Balance on goods (lines 3 and 20)............................................... -246,932 -54,876 -63,500 -64,969 -63,587 -74,203 -84,646 -10,443 72 Balance on services (lines 4 and 21)............................................ 82,650 21,538 21,539 19,245 20,325 20,229 19,630 -599 73 Balance on goods and services (lines 2 and 19).................................. -164,282 -33,338 -41,961 -45,724 -43,262 -53,974 -65,016 -11,042 74 Balance on income (lines 12 and 29)............................................. -12,205 247 -553 -6,965 -4,933 -4,340 -4,382 -42 75 Unilateral current transfers, net (line 35)..................................... -44,075 -9,927 -9,886 -10,787 -13,474 -10,340 -11,275 -935 76 Balance on current account (lines 1, 18, and 35 or lines 73, 74, and 75)........ -220,562 -43,018 -52,400 -63,476 -61,669 -68,654 -80,673 -12,019 r Revised. p Preliminary. 1. Adjusted for timing, valuation, and coverage to balance of payments basis; excludes exports under U. S. military agency sales contracts and imports of U. S. military agencies. 2. Includes some goods that cannot be separately identified from services. NOTE:--Details may not add to totals because of rounding. Source: U. S. Department of Commerce, Bureau of Economic Analysis