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Munich Annual Economic Report
2015
Munich Annual Economic Report
2015
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Munich's position in city rankings
Breakdown of employment by economic sectors in Munich, 2014
Breakdown of employment by economic sectors in Munich, 2014
Unemployment rates in large German cities, 2014
Econonomic growth in Munich and the surrounding region
Purchasing power in large German cities, 2014
Local government debt in the City of Munich
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Abridged version of the
Munich Annual Economic Report 2015
The Munich Annual Economic Report 2015 provides a comprehensive overview of
economic development in Munich in 2014 and looks ahead to what 2015 has in store. Key regional indicators for the City of Munich itself and the surrounding region
are presented and analyzed.
The English translation provides a brief summary of the most important findings of
the city's current Annual Economic Report, which is published in German only: Munich's economy has experienced very positive development in recent years, outperforming both Bavarian and national benchmarks and averages – considerably so, in
some cases. Many business indicators also showed positive developments for
2014. Growth in employment, in particular, looks set to have exceeded the national
average.
For many years, numerous national and international location benchmark tests
have repeatedly given top rankings to Munich as a place to do business. A selection of some of the key rankings is shown in the table below.
Munich – A dynamic business location
For many years, numerous national and international location benchmark tests
have repeatedly given top rankings to Munich as a place to do business. A selection of some of the key rankings is shown in the table below.
Figure
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Munich's position in city rankings
Source: Munich as a business location – Facts and Figures, 2014
Munich Annual Economic Report 2015
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A population of 1.50 million singles Munich out as Germany's third-largest city, after
Hamburg (1.76 million) and Berlin (3.46 million). The Bavarian capital has for some
years been experiencing remarkable population growth, with the number of residents increasing by 15.1% over the past ten years alone. Current forecasts indicate
that the number of residents will exceed the 1.6 million mark by the end of 2018, rising as high as 1.7 million by 2028. Population growth of 15.4% – 230,000 residents – is anticipated for the entire period from 2013 through 2030. The growth
trend is expected to gradually ease off, with the result that strong growth in the next
few years (+1.8% p.a.) will give way to more moderate growth (+0.4%).
Munich is the second-largest venue for employment in Germany. It also boasts the
highest employment rate of all German cities that have 500,000 or more inhabitants. At the same time, Munich has for years been the large German city with the
lowest jobless rate.
Labor market and employment
Last year, socially insured employment in Munich rose by 2.7%, an increase of
around 20,700 jobs. In the two prior years, the level of employment had grown
2.8% and 3.4% respectively. On average for the whole of 2014, a new record figure
of 776,404 people were employed in socially insured jobs in Munich.
In absolute numbers, most new jobs were created in the service sector (+13,400
jobs), with business services in particular delivering the strongest growth (+4.9%,
i.e. +3,154 socially insured jobs). The manufacturing industry too posted remarkable growth, with the automotive sector alone creating around 2,000 new jobs in Munich.
The breakdown of employment across the various sectors in Munich is shown in figure 2. Figure 3 depicts the absolute employment figures in each sector.
Figure
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Breakdown of employment by economic sectors in Munich, 2014
Source: Federal Employment Agency
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Munich Annual Economic Report 2015
Figure
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Breakdown of employment by economic sectors in Munich, 2014
Source: Federal Employment Agency
Despite this growth in the number of jobs, unemployment in Munich remained unchanged at 4.8%. On average, 45,947 individuals were registered as jobless in the
Bavarian capital in 2014. With the exception of Stuttgart, Munich has the lowest unemployment rate of any German city that has 500,000 or more inhabitants.
Figure
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Unemployment rates in large German cities, 2014
Agenturbezirke – Gebietsstand Juni 2014, SV-Beschäftigte zum 30.6.2014
Source: Federal Employment Agency
Munich Annual Economic Report 2015
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Economic growth and purchasing power
Gross domestic product (GDP), a traditional economic indicator, is also calculated
for cities and rural districts. However, the exact figures are often only available after
a considerable time lag. Munich's nominal GDP in 2012, for example, was
EUR 83.5 billion, reflecting a year-on-year increase of 3.3%. This GDP growth puts
Munich ahead of the corresponding national and Bavarian figures. Munich's share
of Bavaria's GDP stands at 17.6%, while the wider Munich region accounts for
nearly 30% of Bavaria's GDP.
Figure
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Econonomic growth in Munich and the surrounding region
Purchasing power – measured as the sum of all net income and government transfer payments – experienced further significant growth of 7.4% in Munich and now
stands at EUR 29,689 per inhabitant. As a result, Munich's purchasing power is
38% higher than the national average and is easily the highest figure of all large
German cities.
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Munich Annual Economic Report 2015
Figure
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Purchasing power in large German cities, 2014
Office property market
The Munich office property market saw 621,000 m² of space change hands in
2014. This figure reflects a year-on-year gain of 4.4%. Nevertheless, the Bavarian
capital was toppled from its position as the leading German office location in the
period under review: Berlin took its place, with office turnover jumping by 26% to a
total of 701,000 m² in 2014. Year on year, the vacancy rate in Munich declined by
one percentage point to 5.1%. Vacant space thus fell to 1,157 million m².
In 2015, industry experts expect to see further stable development on Munich's office property market. Modest growth in office turnover could rise as high as 5%.
Munich Annual Economic Report 2015
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Local government finance
Positive economic development in 2014 also boosted revenues in the Bavarian capital, where a total of around EUR 6.1 billion flowed into the public purse – about
6.5% more than in the previous year. This increase in local government revenues
was essentially attributable to higher tax receipts, which are traditionally the most
important source of the city's funding. Both trade tax and income tax revenues reached new record levels in 2014. Trade tax brought approximately EUR 2.33 billion
into local government coffers, while income tax revenue rose to EUR 950 million.
Munich also further reduced its public debt in 2014, bringing the total down by
EUR 60 million. Local government debt of EUR 908 million thus reduced per-capita
debt to EUR 610 – the lowest figure since 1982. In 2015, no new net borrowings
are planned once again.
Figure
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Local government debt in the City of Munich
(EUR million)
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Munich Annual Economic Report 2015
Summary and outlook
Revitalized economic development characterized the year 2014, and Munich was
no exception. The year's stand-out feature was a further above-average increase in
employment levels in the Bavarian capital, where the number of socially insured
jobs rose by 2.7% to 776,405. Employment has thus been on the rise continually
and at an above average rate for a number of years, and socially insured jobs have
now reached a new peak both in Munich itself and in the entire economic region.
The other business indicators discussed in the report likewise reflect the location's
positive economic development.
Munich's success as a business location is rooted in its economic structure. Virtually all branches of industry that are of significance to the German economy are not
merely represented, but are focal activities in the Bavarian capital. They include
electrical engineering, automotive engineering, information and communication, the
media sector and biotechnology, to name but a few of the most important branches.
It is also important to note that these industries concentrate their research and development activities in Munich. This business location is thus very well placed in
terms of both its companies and the industries and clusters that are represented
here. In order to ensure that Munich remains an attractive and dynamic place to do
business and upholds its outstanding quality of life in the future, the city is therefore
compelled to press ahead with its proactive location and business development policy.
In the interests of maintaining a balanced economic structure, it is also important
for the manufacturing industry to defend its position in the local economy. The year
under review clearly shows that new jobs can be created in the manufacturing sector. At the same time, an adequate manufacturing base adds considerable value
and facilitates the development of the corporate service sector – including applied
research – that has for years driven constant growth in employment. For this reason, the City of Munich must do everything in its power to provide special support
to the manufacturing industry and maintain its local footprint.
Knowledge and creativity are indispensable if Munich is to continue to play a leading role as international competition between companies and business locations
becomes increasingly intense. Munich's universities, public and private research institutions, general and vocational schooling systems and cultural and creative industries leave it extremely well placed to do so. The cultural and creative industries
in particular inject innovative stimulus into the regional economy. This fast-growing
sectors are experiencing rapid change and serve as a powerful image factor for the
entire city.
The City of Munich cooperates with private enterprise, the Free State of Bavaria
and federal government to further improve conditions in this important area. Continually developing culture and the arts as soft location factors not only help attract
new, creative talent to Munich, but also benefit the whole of the local population.
Small and medium-sized companies (SMEs) form the backbone of the German
economy. They are an engine of job creation, but are also a cornerstone of the system of innovation. In Munich, too, they are a key pillar of the economic structure.
Accordingly, promoting these companies in the region, preserving them as a stabilizing factor for the labor market in general and the education market in particular,
and thereby safeguarding the city's economic potency are important objectives of
Munich's economic policy. Despite the fraught situation on Munich's commercial
property market, the City of Munich must therefore continue to develop and provide
a reasonable supply of suitably dimensioned (i.e. small) commercial spaces.
One highly successful tool of local government's economic policy – an excellent example of SME support in action – is the Munich Industry Center concept, which has
proven itself over more than 30 years. Taken together, Munich's eight Industry CenMunich Annual Economic Report 2015
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ters and the Munich Technology Center (MTZ) are currently home to around 550
firms on rented premises totaling more than 105,000 m². Especially for small and
medium-sized skilled craft firms, industrial companies and wholesalers that require
specially fitted buildings and spaces, this concept is a good way to make suitable
space available in densely built up areas of the city.
The boom that Munich has experienced in recent years is making space ever more
scarce. Strong demand for rented apartments has driven up rents and property prices. The euro crisis, the search for safe investment forms and historically low interest rates have given powerful impetus to demand for real estate in recent years.
Forceful current (and projected) population growth is only adding to growth in demand. Going forward, local government must continue to leverage all the options
available to it in order to ease the pressure on the housing market.
The labor market is already showing signs of the challenges that lie ahead: The
shortage of skilled labor will place a burden on the supply side. Especially in a city
like Munich, it is vital to satisfy vigorous demand for so many highly qualified people, including skilled workers. For this reason, it is imperative to keep young talents
here and cement their loyalty to the region, as well as increasing the city's attraction
to new reserves of skilled labor from elsewhere. In particular, better use must be
made of the potential arising from inward migration.
It should nevertheless be noted that demand for skilled labor does not necessarily
lead to a drop in unemployment. On the contrary, it is important to avoid a widening
rift in the labor market as growing unemployment accompanies an increasing shortage of skilled labor. Accordingly, greater use must also be made of endogenous
potential on the local labor market. First, further training and qualifications must be
provided in a suitable way to unemployed persons and those with few qualifications. The Munich Employment and Qualification Program (MBQ) has for years been
local government's response to this challenge. Second, special attention must also
be paid to the education market and to the bottlenecks that are already becoming
apparent here.
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Munich Annual Economic Report 2015
Published by
City of Munich
Department of Labor and
Economic Development
Herzog-Wilhelm-Straße 15
80331 München
Germany
www.muenchen.de/arbeitundwirtschaft
Editor
Eva Schweigard
Telefon: ++49 89 233 2 53 25
E-Mail: [email protected]
Picture credits on cover page:
Tradition and modern spirit in Munich
Joseph-Pschorr-Haus
Photo: Sigi Müller/München Tourismus
Public-space art: Underground station
Georg-Brauchle-Ring
Photo: Christian Bullinger/Münchner Verkehrsgesellschaft MVG
Akademie der Bildenden Künste
Photo: Michael Nagy/Presseamt München
July 2015,
Published by the Department of Labor
and Economic Development,
Munich Annual Economic Report 2015
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Munich Annual Economic Report
2015