FOR WIRE TRANSMISSION: 10:00 A.M. EDT, THURSDAY, JUNE 19, 1997 Douglas B. Weinberg: (202) 606-9590 (Data) BEA 97-17 Christopher L. Bach 606-9545 (Revisions) Recorded Message: 606-5362 U.S. International Transactions, First Quarter 1997 Current account The U.S. current-account deficit increased to $41.0 billion in the first quarter of 1997 from $36.9 billion (revised) in the fourth quarter of 1996. A shift to a deficit on investment income was augmented by an increase in the deficit on goods and services. A decrease in net unilateral transfers was partly offsetting. [The international transactions accounts have undergone substantial revision as a result of major improvements in estimating methodologies and in the development of new source data. See section on "revisions" at the end of this release.] Goods and services The deficit on goods and services increased to $29.1 billion in the first quarter from $26.2 billion in the fourth. Goods The deficit on goods increased to $49.8 billion in the first quarter from $48.2 billion in the fourth. Goods exports increased to $162.5 billion from $157.8 billion. Nonagricultural exports more than accounted for the increase; agricultural exports decreased. Goods imports increased to $212.3 billion from $206.0 billion. Nonpetroleum imports more than accounted for the increase; petroleum imports decreased. Services The surplus on services decreased to $20.7 billion in the first quarter from $22.0 billion in the fourth. Service receipts were $62.0 billion, compared with $61.7 billion. Increases in "other" private services and in travel were partly offset by a decline in transfers under U.S. military agency sales contracts. Service payments were $41.3 billion, compared with $39.7 billion. Most of the increase was accounted for by travel, passenger fares, and "other" private services. Investment income The balance on investment income shifted to a deficit of $3.1 billion in the first quarter from a surplus of $1.3 billion in the fourth. Income receipts on U.S. assets abroad were virtually unchanged at $55.0 billion. Changes in direct investment receipts and "other" private receipts were nearly offsetting. Income payments on foreign assets in the United States increased to $58.1 billion from $53.8 billion. All components contributed to the increase. Unilateral transfers Net unilateral transfers were $8.7 billion in the first quarter, down from $11.9 billion in the fourth. Fourth-quarter transactions had been boosted by special grants to Israel. Capital transactions Net recorded capital inflows--that is, net changes in U.S. assets abroad less net changes in foreign assets in the United States--were $59.1 billion in the first quarter, compared with $40.1 billion in the fourth. Increases in both recorded capital outflows and inflows slowed in the first quarter from the fourth. However, the increase in capital outflows slowed more than the increase in capital inflows. U.S. assets abroad U.S. assets abroad increased $99.8 billion in the first quarter, compared with an increase of $154.4 billion in the fourth. U.S. claims on foreigners reported by U.S. banks increased $56.6 billion in the first quarter, compared with an increase of $66.7 billion in the fourth. The increase in interbank claims dropped sharply from exceptional strength in the fourth quarter; claims on international bond mutual funds in the Caribbean also dropped sharply. Net U.S. purchases of foreign securities were $14.5 billion in the first quarter, down from $30.2 billion in the fourth. Net U.S. purchases of bonds slowed sharply, more than accounting for the decline, while net U.S. purchases of foreign stocks remained strong. Net capital outflows for U.S. direct investment abroad were $24.6 billion in the first quarter, down from $30.9 billion in the fourth. Equity capital outflows strengthened, but were more than offset by a very large shift to net inflows for intercompany debt transactions. Reinvested earnings decreased. U.S. official reserve assets decreased $4.5 billion in the first quarter, following an increase of $0.3 billion in the fourth. The decrease in the first quarter reflected the final repayment by Mexico of $3.5 billion on its drawings under medium-term swap arrangements with the U.S. Treasury. Foreign assets in the United States Foreign assets in the United States increased $158.9 billion in the first quarter, compared with an increase of $194.6 billion in the fourth. U.S. liabilities to foreigners reported by U.S. banks increased $18.9 billion in the first quarter, compared with a $39.0 billion increase in the fourth. Interbank borrowing slowed sharply, partly in response to the slowdown in interbank lending by U.S. banks from exceptional levels in the fourth quarter. Net foreign private purchases of U.S. Treasury securities and U.S. currency flows increased $46.4 billion in the first quarter, compared with a $75.3 billion increase in the fourth. Net foreign purchases of U.S. Treasury securities slowed to $42.9 billion from $67.5 billion, but remained strong. Much of the slowdown was with international bond mutual funds in the Caribbean; net purchases from Western Europe and Asia remained strong. Net foreign purchases of U.S. securities other than U.S. Treasury securities were a record $38.7 billion in the first quarter, up from $32.4 billion in the fourth. Net foreign purchases of U.S. stocks jumped sharply, and net foreign purchases of U.S. bonds decreased a small amount. Net capital inflows for foreign direct investment in the United States were $21.7 billion in the first quarter, up from $17.7 billion in the fourth. Equity capital inflows slowed, but remained strong, while intercompany debt inflows and reinvested earnings increased. Foreign official assets in the United States increased $28.3 billion in the first quarter, compared with an increase of $33.1 billion in the fourth. In the first quarter, assets of industrial countries increased much more strongly than in the fourth, while assets of developing countries increased much less strongly than in the fourth. The statistical discrepancy--errors and omissions in recorded transactions--was an outflow of $18.1 billion in the first quarter, compared with an outflow of $3.3 billion in the fourth. In the first quarter, the dollar appreciated 7 percent on a trade-weighted quarterly average basis against the currencies of 10 industrial countries. Revisions As is customary each June, estimates of U.S. international transactions are revised to incorporate improved methodologies and updated source data. This year, a number of improvements are introduced for 1974-96. In most cases, the newly available data permitted the improvements to be made only for more recent years. The major improvements are summarized below. * Improved estimates of income receipts are introduced for 1985-96, reflecting incorporation of newly available results of the Treasury Department's Benchmark Survey of Portfolio Investment Abroad. The Survey, which collected data on U.S. holdings of foreign stocks and bonds as of March 1994, greatly improved coverage of transactions. * Royalties and license fees, other private services, income payments, and capital flows are revised for 1992-96. The improved estimates are based on BEA's 1992 Benchmark Survey of Foreign Direct Investment in the United States. This survey provides data for the universe of foreign direct investment in the United States. * Other private service receipts and other private service payments are revised for 1996 to reflect data collected on BEA's Benchmark Survey of Selected Services with Unaffiliated Foreigners for 1996. The survey provides more complete data, which replace estimates based largely on indicator series. * Other private service receipts and other private service payments are revised for 1995-96 to include results from BEA's annual surveys of financial services for those years; these are BEA's first annual surveys of financial services. They update the results of BEA's first Benchmark Survey of Financial Services with Unaffiliated Foreigners, covering 1994. * Other private service receipts and other private service payments are revised for 1986-96 to reflect new estimates of earnings and expenditures of temporary workers in the United States. The new estimates are based on source data from the Department of Labor and the Department of Agriculture. * Other transportation receipts are revised to incorporate newly available source data on freight charges for truck transportation between the United States and Canada and newly developed measures of ocean port service receipts. Revisions for truck transportation are for 1995-96. Revisions to ocean port service receipts are for 1992-96. The newly available source data on freight charges are from the Bureau of the Census. The newly developed measures of ocean port service receipts are based on details now provided in BEA's surveys of ocean transportation. * International flows of U.S. currency are introduced to the accounts for 1974-96; they are combined with private transactions in U.S. Treasury securities. The new estimates were developed by the Federal Reserve Board. Some dimensions of this type of international activity were presented in the October 1996 issue of the Survey of Current Business. * Unrealized currency translation gains and losses on certain bank claims and bank liabilities are removed from the international transactions accounts for 1992-96, and placed more appropriately as a valuation adjustment to the Net International Investment Position accounts. Estimates of these gains and losses are based on international banking statistics compiled by the Bank for International Settlements. In addition to the above improvements, all estimates have been revised as a result of newly available or revised quarterly and annual survey results and other source data. Revisions to travel and passenger fares were based on unusually large changes in source data. Most revisions attributable to updated source data are for 1993-96. Revised estimates for the detailed components of the U.S. international transactions accounts for 1995-96 are shown in the attached table. For 1986-96, revisions to the balance on current account are as follows: Previously Revised Revision Published [Millions of dollars] 1986 -152,088 -153,193 -1,105 1987 -167,392 -168,053 -661 1988 -128,436 -128,245 191 1989 -105,575 -104,231 1,334 1990 -94,657 -91,892 2,765 1991 -9,518 -5,657 3,861 1992 -62,583 -56,383 6,200 1993 -99,936 -90,771 9,165 1994 -148,405 -133,538 14,867 1995 -148,154 -129,095 19,059 1996 -165,095 -148,184 16,911 * * * Release dates in 1997: Second quarter 1997....................September 11 (Thu) Third quarter 1997......................December 10 (Wed) * * * BEA estimates are available in several forms besides the printed news releases. News releases are available at the time of public release through three subscription services offered by the Commerce Department's STAT-USA. Information on how to receive releases by FAX may be obtained by calling (202) 482-1986 (voice). Information about the Economic Bulletin Board (EBB) and about Internet services may be obtained at the same voice number and on-line, as follows: EBB (202) 482-3870 Internet http://www.stat-usa.gov In addition, BEA's most frequently requested statistical series are available on the Internet, as follows: * The Federal Statistics Briefing Room (FSBR) on the White House web site provides summary statistics for GDP and other major aggregates on its output, income, and international statistics pages. http://www.whitehouse.gov/fsbr * The FSBR provides links to BEA's web site, which provides summary tables and charts on BEA's national, international, and regional data. http://www.bea.gov * BEA's web site provides links to detailed BEA databases on STAT-USA's Internet subscription service. http://www.stat-usa.gov Summary estimates are available on recorded messages at the time of public release at the following telephone numbers: (202) 606-5306 Gross domestic product 5303 Personal income and outlays 5362 U.S. international transactions * * * Additional data and analysis for the first quarter of 1997 will be published in the July 1997 issue of the Survey of Current Business, the monthly journal of the Bureau of Economic Analysis. The Survey is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. First class mail (domestic only): annual subscription $69.00. Foreign airmail delivery rates are available upon request. Second class mail: annual subscription $35.00 domestic, $43.75 foreign; single issue $11.00 domestic, $13.75 foreign. In addition, the Survey of Current Business is now available on Internet in a searchable, retrievable electronic format at least a week before the printed version. To subscribe to STAT-USA's World Wide Web system, go to http://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. U.S. International Transactions June 19, 1997 [Millions of dollars, seasonally adjusted] 1995 1996 1997 Change: Amount of (Credits +, debits -) 1996 IV- Revision 1995r 1996r Ir IIr IIIr IVr Ir IIr IIIr IVr Ip 1997 I 1996 1 Exports of goods, services, and income ................... 991,490 1,055,233 237,587 246,787 250,734 256,382 256,382 262,335 261,979 274,545 279,468 4,923 22,755 2 Goods, adjusted, excluding military 1/.................. 575,871 612,069 138,389 143,181 145,360 148,941 150,048 153,411 150,764 157,846 162,527 4,681 400 3 Services 2/............................................. 218,739 236,764 51,980 53,303 56,244 57,211 57,057 58,736 59,322 61,656 61,991 335 12,857 4 Transfers under U.S. military agency sales contracts . 13,756 14,647 3,249 3,452 3,758 3,297 3,092 3,961 3,572 4,022 3,318 -704 845 5 Travel................................................ 63,395 69,908 14,863 15,041 16,357 17,133 16,712 17,356 17,659 18,183 18,621 438 5,409 6 Passenger fares....................................... 19,125 20,557 4,573 4,571 4,889 5,092 5,087 4,952 5,237 5,282 5,316 34 978 7 Other transportation.................................. 27,412 27,216 6,605 6,907 6,864 7,037 6,555 6,805 6,716 7,142 7,058 -84 -1,899 8 Royalties and license fees............................ 27,383 29,974 6,487 6,736 7,078 7,082 7,432 7,345 7,495 7,703 7,733 30 1,144 9 Other private services................................ 66,850 73,569 16,001 16,438 17,036 17,374 17,890 18,130 18,433 19,117 19,748 631 6,301 10 U.S. Government miscellaneous services................ 818 893 202 158 262 196 289 187 210 207 197 -10 78 11 Income receipts on U.S. assets abroad................... 196,880 206,400 47,218 50,303 49,130 50,230 49,277 50,188 51,893 55,043 54,950 -93 9,498 12 Direct investment receipts............................ 90,349 98,890 21,425 23,416 22,347 23,162 23,389 23,929 24,675 26,898 25,705 -1,193 630 13 Other private receipts................................ 101,836 102,866 24,611 25,522 25,740 25,963 24,643 25,053 25,938 27,232 28,399 1,167 8,788 14 U.S. Government receipts.............................. 4,695 4,644 1,182 1,365 1,043 1,105 1,245 1,206 1,280 913 846 -67 80 15 Imports of goods, services, and income....................-1,086,539 -1,163,450 -263,845 -274,363 -275,019 -273,316 -278,860 -289,231 -295,865 -299,493 -311,725 -12,232 -8,349 16 Goods, adjusted, excluding military 1/.................. -749,431 -803,239 -182,790 -190,739 -188,180 -187,722 -192,973 -200,973 -203,257 -206,036 -212,314 -6,278 -3,896 17 Services 2/............................................. -147,036 -156,634 -35,884 -36,544 -37,308 -37,304 -38,671 -38,953 -39,345 -39,664 -41,321 -1,657 -6,194 18 Direct defense expenditures........................... -9,890 -10,861 -2,527 -2,468 -2,469 -2,426 -2,607 -2,747 -2,780 -2,727 -2,800 -73 132 19 Travel................................................ -46,053 -48,739 -11,280 -11,493 -11,496 -11,784 -12,484 -12,099 -11,915 -12,241 -13,087 -846 -27 20 Passenger fares....................................... -14,433 -15,776 -3,358 -3,605 -3,706 -3,764 -3,860 -3,943 -3,920 -4,053 -4,277 -224 -1,489 21 Other transportation.................................. -28,249 -28,453 -7,091 -7,088 -7,153 -6,918 -6,816 -7,253 -7,218 -7,166 -7,313 -147 647 22 Royalties and license fees............................ -6,503 -7,322 -1,511 -1,563 -1,690 -1,740 -1,724 -1,684 -2,144 -1,770 -1,907 -137 -286 23 Other private services................................ -39,285 -42,796 -9,425 -9,691 -10,132 -10,039 -10,522 -10,570 -10,676 -11,027 -11,253 -226 -5,170 24 U.S. Government miscellaneous services................ -2,623 -2,687 -692 -636 -662 -633 -658 -657 -692 -680 -684 -4 -1 25 Income payments on foreign assets in the United States.. -190,072 -203,577 -45,171 -47,080 -49,531 -48,290 -47,216 -49,305 -53,263 -53,793 -58,090 -4,297 1,741 26 Direct investment payments............................ -30,345 -32,132 -7,035 -7,379 -8,883 -7,048 -6,842 -7,873 -9,612 -7,805 -9,459 -1,654 1,685 27 Other private payments................................ -98,448 -100,103 -23,897 -24,640 -24,841 -25,070 -24,210 -24,600 -25,158 -26,135 -27,492 -1,357 56 28 U.S. Government payments.............................. -61,279 -71,342 -14,239 -15,061 -15,807 -16,172 -16,164 -16,832 -18,493 -19,853 -21,139 -1,286 .... 29 Unilateral transfers, net................................. -34,046 -39,968 -8,451 -8,128 -8,847 -8,620 -10,406 -8,689 -8,947 -11,926 -8,709 3,217 2,504 30 U.S. Government grants.................................. -11,096 -14,933 -2,865 -2,399 -2,987 -2,845 -4,321 -2,423 -2,690 -5,499 -2,162 3,337 -299 31 U.S. Government pensions and other transfers............ -3,420 -4,331 -758 -967 -964 -731 -1,136 -1,081 -1,064 -1,050 -1,098 -48 -98 32 Private remittances and other transfers................. -19,530 -20,704 -4,828 -4,762 -4,896 -5,044 -4,949 -5,185 -5,193 -5,377 -5,449 -72 2,901 U.S. International Transactions (Continued) June 19, 1997 [Millions of dollars, seasonally adjusted] 1995 1996 1997 Change: Amount of (Credits +, debits -) 1996 IV- Revision 1995r 1996r Ir IIr IIIr IVr Ir IIr IIIr IVr Ip 1997 I 1996 33 U.S. assets abroad, net (increase/capital outflow (-))..................-307,207 -352,444 -59,625 -110,548 -40,679 -96,356 -70,768 -49,698 -77,542 -154,436 -99,787 54,649 -45,613 34 U.S. official reserve assets, net..................................... -9,742 6,668 -5,318 -2,722 -1,893 191 17 -523 7,489 -315 4,480 4,795 .... 35 Gold................................................................ .... .... .... .... .... .... .... .... .... .... .... .... .... 36 Special drawing rights.............................................. -808 370 -867 -156 362 -147 -199 -133 848 -146 72 218 .... 37 Reserve position in the International Monetary Fund................. -2,466 -1,280 -526 -786 -991 -163 -849 -220 -183 -28 1,055 1,083 .... 38 Foreign currencies.................................................. -6,468 7,578 -3,925 -1,780 -1,264 501 1,065 -170 6,824 -141 3,353 3,494 .... 39 U.S. Government assets, other than official reserve assets, net....... -549 -690 -158 -184 266 -473 -210 -358 162 -284 31 315 -25 40 U.S. credits and other long-term assets............................. -4,803 -4,930 -1,622 -815 -1,014 -1,352 -1,076 -1,489 -1,127 -1,238 -1,112 126 -21 41 Repayments on U.S. credits and other long-term assets............... 4,115 4,134 1,069 642 1,522 882 1,013 870 1,206 1,045 1,135 90 -21 42 U.S. foreign currency holdings and U.S. short-term assets, net...... 139 106 395 -11 -242 -3 -147 261 83 -91 8 99 17 43 U.S. private assets, net..............................................-296,916 -358,422 -54,149 -107,642 -39,052 -96,074 -70,575 -48,817 -85,193 -153,837 -104,298 49,539 -45,588 44 Direct investment................................................... -86,737 -87,813 -14,126 -13,662 -14,385 -44,565 -22,210 -23,634 -11,104 -30,865 -24,628 6,237 492 45 Foreign securities..................................................-100,074 -108,189 -7,631 -23,313 -36,144 -32,986 -34,455 -20,328 -23,206 -30,200 -14,510 15,690 -3,656 46 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns....................................... -34,997 -64,234 -4,044 -23,147 6,988 -14,794 -15,778 -5,047 -17,294 -26,115 -8,600 17,515 -32,457 47 U.S. claims reported by U.S. banks, not included elsewhere.......... -75,108 -98,186 -28,348 -47,520 4,489 -3,729 1,868 192 -33,589 -66,657 -56,560 10,097 -9,967 48 Foreign assets in the United States, net (increase/capital inflow(+))... 451,234 547,555 97,652 122,714 125,839 105,029 88,233 106,114 158,629 194,579 158,867 -35,712 22,509 49 Foreign official assets in the United States, net..................... 110,729 122,354 22,098 37,138 39,585 11,908 52,014 13,154 24,089 33,097 28,337 -4,760 -424 50 U.S. Government securities.......................................... 72,712 115,634 11,258 26,560 21,116 13,778 55,652 -2,125 26,689 35,418 23,758 -11,660 152 51 U.S. Treasury securities.......................................... 68,977 111,253 10,132 25,234 20,598 13,013 55,600 -3,383 25,472 33,564 23,107 -10,457 102 52 Other............................................................. 3,735 4,381 1,126 1,326 518 765 52 1,258 1,217 1,854 651 -1,203 50 53 Other U.S. Government liabilities................................... 744 720 -420 120 -221 1,265 -143 -204 907 160 377 217 -684 54 U.S. liabilities reported by U.S. banks, not included elsewhere..... 34,008 4,722 10,995 7,510 18,918 -3,415 -3,284 14,198 -1,922 -4,270 7,489 11,759 108 55 Other foreign official assets....................................... 3,265 1,278 265 2,948 -228 280 -211 1,285 -1,585 1,789 -3,287 -5,076 .... 56 Other foreign assets in the United States, net........................ 340,505 425,201 75,554 85,576 86,254 93,121 36,219 92,960 134,540 161,482 130,530 -30,952 22,933 57 Direct investment................................................... 67,526 76,955 12,873 10,209 24,568 19,876 15,877 17,440 25,977 17,661 21,700 4,039 -6,996 58 U.S. Treasury securities and U.S. currency flows.................... 111,848 172,878 36,411 32,339 39,195 3,903 10,602 36,152 50,798 75,326 46,401 -28,925 19,094 59 U.S. securities other than U.S. Treasury securities................. 96,367 133,798 15,734 20,606 32,128 27,899 36,475 29,761 35,115 32,447 38,738 6,291 2,116 60 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns....................................... 34,588 31,786 9,075 7,286 6,968 11,259 6,800 7,288 20,610 -2,912 4,800 7,712 -2,624 61 U.S. liabilities reported by U.S. banks, not included elsewhere..... 30,176 9,784 1,461 15,136 -16,605 30,184 -33,535 2,319 2,040 38,960 18,891 -20,069 11,342 62 Allocations of special drawing rights................................... .... .... .... .... .... .... .... .... .... .... .... .... .... 63 Statistical discrepancy (sum of above items with sign reversed)......... -14,931 -46,927 -3,318 23,538 -52,028 16,881 15,419 -20,831 -38,254 -3,269 -18,114 -14,845 6,195 Of which seasonal adjustment discrepancy.............................. .... .... 5,658 -775 -6,985 2,106 6,228 -1,076 -7,830 2,669 7,325 4,656 .... Memoranda: 64 Balance on goods (lines 2 and 16).......................................-173,560 -191,170 -44,401 -47,558 -42,820 -38,781 -42,925 -47,562 -52,493 -48,190 -49,787 -1,597 -3,496 65 Balance on services (lines 3 and 17).................................... 71,703 80,130 16,096 16,759 18,936 19,907 18,386 19,783 19,977 21,992 20,670 -1,322 6,663 66 Balance on goods and services (lines 64 and 65).........................-101,857 -111,040 -28,305 -30,799 -23,884 -18,874 -24,539 -27,779 -32,516 -26,198 -29,117 -2,919 3,167 67 Balance on investment income (lines 11 and 25).......................... 6,808 2,824 2,047 3,223 -401 1,940 2,061 883 -1,370 1,250 -3,140 -4,390 11,239 68 Balance on goods, services, and income (lines 1 and 15 or lines 66 and 67) .............................................................. -95,049 -108,216 -26,258 -27,576 -24,285 -16,934 -22,478 -26,896 -33,886 -24,948 -32,257 -7,309 14,406 69 Unilateral transfers, net (line 29)..................................... -34,046 -39,968 -8,451 -8,128 -8,847 -8,620 -10,406 -8,689 -8,947 -11,926 -8,709 3,217 2,504 70 Balance on current account (lines 1, 15, and 29 or lines 68 and 69).....-129,095 -148,184 -34,709 -35,704 -33,132 -25,554 -32,884 -35,585 -42,833 -36,874 -40,966 -4,092 16,910 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