FOR WIRE TRANSMISSION: 10:00 A.M. EDT, THURSDAY, SEPTEMBER 11, 1997 Douglas B. Weinberg: (202) 606-9590 BEA 97-28 Recorded Message: 606-5362 U.S. International Transactions: Second Quarter 1997 Current account The U.S. current-account deficit decreased to $39.0 billion in the second quarter from $40.0 billion (revised) in the first, according to preliminary estimates of the Commerce Department's Bureau of Economic Analysis. A decrease in the deficit on goods and services more than offset an increase in the deficit on investment income and higher net unilateral transfers. Goods and services The deficit on goods and services decreased to $26.4 billion in the second quarter from $29.3 billion in the first. Goods The deficit on goods decreased to $46.9 billion in the second quarter from $49.8 billion in the first. Goods exports increased to $171.5 billion from $162.5 billion. The increase was more than accounted for by a rise in nonagricultural exports. Goods imports increased to $218.4 billion from $212.3 billion. The increase was more than accounted for by a rise in nonpetroleum imports. Services The surplus on services was unchanged at $20.5 billion in the second quarter. Service receipts increased to $62.6 billion from $61.7 billion. Most of the increase was accounted for by rises in "other" private services and in transfers under U.S. military agency sales contracts; a decrease in travel was partly offsetting. Service payments increased to $42.1 billion from $41.2 billion. Most of the increase was accounted for by rises in "other" private services, in royalties and license fees, and in "other" transportation. Investment income The deficit on investment income increased to $3.6 billion in the second quarter from $2.0 billion in the first. Income receipts on U.S. assets abroad increased to $58.6 billion from $55.3 billion. Most of the increase was accounted for by rises in direct investment receipts and in "other" private receipts. Income payments on foreign assets in the United States increased to $62.1 billion from $57.3 billion. All major components rose by nearly equal amounts. Unilateral transfers Net unilateral transfers were $9.1 billion in the second quarter, compared with $8.7 billion in the first. All major components contributed to the increase. Capital transactions Net recorded capital inflows were $56.2 billion in the second quarter, compared with $54.3 billion in the first. The increase in U.S. assets abroad slowed more than the increase in foreign assets in the United States. U.S. assets abroad U.S. assets abroad increased $95.5 billion in the second quarter, compared with an increase of $128.0 billion in the first. U.S. claims on foreigners reported by U.S. banks increased $29.6 billion in the second quarter, following an increase of $62.0 billion in the first. Banks' own claims and banks' domestic customers' claims both increased much less in the second quarter than in the first as a result of sharply reduced demand for U.S. bank credit abroad. Net U.S. purchases of foreign securities were $21.3 billion in the second quarter, up from $14.5 billion in the first. Net U.S. purchases of foreign stocks strengthened as a result of a surge in net purchases from Japan. Net U.S. purchases of foreign bonds also rose. Net capital outflows for U.S. direct investment abroad were $29.1 billion in the second quarter, up from $26.4 billion in the first. A shift to net intercompany debt outflows from inflows more than offset small decreases in net equity capital outflows and in reinvested earnings, both of which remained strong. U.S. official reserve assets increased $0.2 billion in the second quarter, following a decrease of $4.5 billion in the first that reflected repayment by Mexico of drawings under swap arrangements. Foreign assets in the United States Foreign assets in the United States increased $151.6 billion in the second quarter, compared with an increase of $182.2 billion in the first. U.S. liabilities to foreigners reported by U.S. banks, excluding U.S. Treasury securities, increased $27.1 billion in the second quarter, following an increase of $17.4 billion in the first. Banks' own liabilities increased less than in the first quarter, partly reflecting a slowdown in demand for U.S. bank credit abroad; banks' custody liabilities increased following a first-quarter decrease. Net foreign private purchases of U.S. Treasury securities and U.S. currency flows were $50.8 billion in the second quarter, down from $51.3 billion in the first. Net foreign purchases of U.S. Treasury securities were $46.0 billion, down from $47.8 billion. Net foreign purchases of Treasury bonds decreased as a result of a decline in net purchases from the United Kingdom and a shift to net sales from international bond funds in the Caribbean. Net foreign purchases of U.S. securities other than U.S. Treasury securities were a record $51.5 billion in the second quarter, up from $38.8 billion in the first. Net foreign purchases of U.S. stocks surged to a record level, and net foreign purchases of U.S. bonds remained strong. Net capital inflows for foreign direct investment in the United States were $28.9 billion in the second quarter, down from $30.6 billion in the first. Most of the decrease was accounted for by a decline in net intercompany debt inflows, which nonetheless remained strong; net equity capital inflows also decreased and reinvested earnings were unchanged. Foreign official assets in the United States decreased $3.7 billion in the second quarter, following an increase of $28.9 billion in the first. The decrease was more than accounted for by a decline in assets of non-OPEC developing countries. Increases in assets of industrial countries were partly offsetting. The statistical discrepancy -- errors and omissions in recorded transactions -- was an outflow of $17.1 billion in the second quarter, compared with an outflow of $14.3 billion in the first. In the second quarter, the U.S. dollar appreciated 2 percent on a trade-weighted quarterly average basis against the currencies of 10 industrial countries. * * * Release dates for 1997: 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 second quarter of 1997 will be published in the October 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 September 11, 1997 [Millions of dollars, seasonally adjusted] 1996 1997 Change: (Credits +, debits -) 1997 1996 I II III IV Ir IIp I-II 1 Exports of goods, services, and income .............................. 1,055,233 256,382 262,335 261,979 274,545 279,521 292,721 13,200 2 Goods, adjusted, excluding military 1/............................. 612,069 150,048 153,411 150,764 157,846 162,527 171,489 8,962 3 Services 2/........................................................ 236,764 57,057 58,736 59,322 61,656 61,725 62,637 912 4 Transfers under U.S. military agency sales contracts ............ 14,647 3,092 3,961 3,572 4,022 3,190 3,582 392 5 Travel........................................................... 69,908 16,712 17,356 17,659 18,183 18,556 18,091 -465 6 Passenger fares.................................................. 20,557 5,087 4,952 5,237 5,282 5,319 5,308 -11 7 Other transportation............................................. 27,216 6,555 6,805 6,716 7,142 6,999 7,139 140 8 Royalties and license fees ...................................... 29,974 7,432 7,345 7,495 7,703 7,699 7,935 236 9 Other private services .......................................... 73,569 17,890 18,130 18,433 19,117 19,759 20,392 633 10 U.S. Government miscellaneous services............................ 893 289 187 210 207 203 190 -13 11 Income receipts on U.S. assets abroad.............................. 206,400 49,277 50,188 51,893 55,043 55,269 58,595 3,326 12 Direct investment receipts....................................... 98,890 23,389 23,929 24,675 26,898 25,872 27,498 1,626 13 Other private receipts........................................... 102,866 24,643 25,053 25,938 27,232 28,544 30,096 1,552 14 U.S. Government receipts......................................... 4,644 1,245 1,206 1,280 913 853 1,001 148 15 Imports of goods, services, and income...............................-1,163,450 -278,860 -289,231 -295,865 -299,493 -310,811 -322,688 -11,877 16 Goods, adjusted, excluding military 1/............................. -803,239 -192,973 -200,973 -203,257 -206,036 -212,314 -218,392 -6,078 17 Services 2/........................................................ -156,634 -38,671 -38,953 -39,345 -39,664 -41,238 -42,147 -909 18 Direct defense expenditures...................................... -10,861 -2,607 -2,747 -2,780 -2,727 -2,753 -2,800 -47 19 Travel........................................................... -48,739 -12,484 -12,099 -11,915 -12,241 -13,018 -13,093 -75 20 Passenger fares.................................................. -15,776 -3,860 -3,943 -3,920 -4,053 -4,283 -4,314 -31 21 Other transportation............................................. -28,453 -6,816 -7,253 -7,218 -7,166 -7,378 -7,562 -184 22 Royalties and license fees ...................................... -7,322 -1,724 -1,684 -2,144 -1,770 -1,799 -1,992 -193 23 Other private services .......................................... -42,796 -10,522 -10,570 -10,676 -11,027 -11,321 -11,712 -391 24 U.S. Government miscellaneous services........................... -2,687 -658 -657 -692 -680 -686 -674 12 25 Income payments on foreign assets in the United States............. -203,577 -47,216 -49,305 -53,263 -53,793 -57,259 -62,149 -4,890 26 Direct investment payments....................................... -32,132 -6,842 -7,873 -9,612 -7,805 -8,539 -10,113 -1,574 27 Other private payments........................................... -100,103 -24,210 -24,600 -25,158 -26,135 -27,581 -29,242 -1,661 28 U.S. Government payments......................................... -71,342 -16,164 -16,832 -18,493 -19,853 -21,139 -22,794 -1,655 29 Unilateral transfers, net............................................ -39,968 -10,406 -8,689 -8,947 -11,926 -8,682 -9,063 -381 30 U.S. Government grants ............................................ -14,933 -4,321 -2,423 -2,690 -5,499 -2,109 -2,255 -146 31 U.S. Government pensions and other transfers....................... -4,331 -1,136 -1,081 -1,064 -1,050 -1,083 -1,128 -45 32 Private remittances and other transfers ........................... -20,704 -4,949 -5,185 -5,193 -5,377 -5,490 -5,680 -190 U.S. International Transactions (Continued) September 11, 1997 [Millions of dollars, seasonally adjusted] 1996 1997 Change: (Credits +, debits -) 1997 1996 I II III IV Ir IIp I-II 33 U.S. assets abroad, net (increase/capital outflow (-))...............-352,444 -70,768 -49,698 -77,542 -154,436 -127,969 -95,492 32,477 34 U.S. official reserve assets, net ................................. 6,668 17 -523 7,489 -315 4,480 -236 -4,716 35 Gold............................................................. .... .... .... .... .... .... .... .... 36 Special drawing rights........................................... 370 -199 -133 848 -146 72 -133 -205 37 Reserve position in the International Monetary Fund.............. -1,280 -849 -220 -183 -28 1,055 54 -1,001 38 Foreign currencies............................................... 7,578 1,065 -170 6,824 -141 3,353 -157 -3,510 39 U.S. Government assets, other than official reserve assets, net.... -690 -210 -358 162 -284 -21 -238 -217 40 U.S. credits and other long-term assets.......................... -4,930 -1,076 -1,489 -1,127 -1,238 -1,107 -1,572 -465 41 Repayments on U.S. credits and other long-term assets ........... 4,134 1,013 870 1,206 1,045 1,111 1,328 217 42 U.S. foreign currency holdings and U.S. short-term assets, net... 106 -147 261 83 -91 -25 6 31 43 U.S. private assets, net...........................................-358,422 -70,575 -48,817 -85,193 -153,837 -132,428 -95,018 37,410 44 Direct investment................................................ -87,813 -22,210 -23,634 -11,104 -30,865 -26,426 -29,081 -2,655 45 Foreign securities...............................................-108,189 -34,455 -20,328 -23,206 -30,200 -14,510 -21,325 -6,815 46 U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns..................................... -64,234 -15,778 -5,047 -17,294 -26,115 -29,466 -15,000 14,466 47 U.S. claims reported by U.S. banks, not included elsewhere....... -98,186 1,868 192 -33,589 -66,657 -62,026 -29,612 32,414 48 Foreign assets in the United States, net (increase/capital inflow(+)) 547,555 88,233 106,114 158,629 194,579 182,238 151,649 -30,589 49 Foreign official assets in the United States, net.................. 122,354 52,014 13,154 24,089 33,097 28,891 -3,719 -32,610 50 U.S. Government securities....................................... 115,634 55,652 -2,125 26,689 35,418 23,940 -7,800 -31,740 51 U.S. Treasury securities ...................................... 111,253 55,600 -3,383 25,472 33,564 23,289 -8,444 -31,733 52 Other.......................................................... 4,381 52 1,258 1,217 1,854 651 644 -7 53 Other U.S. Government liabilities ............................... 720 -143 -204 907 160 478 804 326 54 U.S. liabilities reported by U.S. banks, not included elsewhere.. 4,722 -3,284 14,198 -1,922 -4,270 7,698 2,346 -5,352 55 Other foreign official assets ................................... 1,278 -211 1,285 -1,585 1,789 -3,225 931 4,156 56 Other foreign assets in the United States, net..................... 425,201 36,219 92,960 134,540 161,482 153,347 155,368 2,021 57 Direct investment................................................ 76,955 15,877 17,440 25,977 17,661 30,641 28,872 -1,769 58 U.S. Treasury securities and U.S. currency flows................. 172,878 10,602 36,152 50,798 75,326 51,289 50,816 -473 59 U.S. securities other than U.S. Treasury securities.............. 133,798 36,475 29,761 35,115 32,447 38,820 51,537 12,717 60 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns..................................... 31,786 6,800 7,288 20,610 -2,912 15,210 -3,000 -18,210 61 U.S. liabilities reported by U.S. banks, not included elsewhere.. 9,784 -33,535 2,319 2,040 38,960 17,387 27,143 9,756 62 Allocations of special drawing rights................................ .... .... .... .... .... .... .... .... 63 Statistical discrepancy (sum of above items with sign reversed)...... -46,927 15,419 -20,831 -38,254 -3,269 -14,297 -17,127 -2,830 Of which, seasonal adjustment discrepancy...................... .... 6,228 -1,076 -7,830 2,669 7,059 -1,768 -8,827 Memoranda: 64 Balance on goods (lines 2 and 16)....................................-191,170 -42,925 -47,562 -52,493 -48,190 -49,787 -46,903 2,884 65 Balance on services (lines 3 and 17)................................. 80,130 18,386 19,783 19,977 21,992 20,487 20,490 3 66 Balance on goods and services (lines 64 and 65)......................-111,040 -24,539 -27,779 -32,516 -26,198 -29,300 -26,413 2,887 67 Balance on investment income (lines 11 and 25)....................... 2,824 2,061 883 -1,370 1,250 -1,990 -3,554 -1,564 68 Balance on goods, services, and income (lines 1 and 15 or lines 66 and 67) ...........................................................-108,216 -22,478 -26,896 -33,886 -24,948 -31,290 -29,967 1,323 69 Unilateral transfers, net (line 29).................................. -39,968 -10,406 -8,689 -8,947 -11,926 -8,682 -9,063 -381 70 Balance on current account (lines 1, 15, and 29 or lines 68 and 69)..-148,184 -32,884 -35,585 -42,833 -36,874 -39,972 -39,030 942 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