Recruit Sales in Germany Update Bulletin May 23
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Recruiting in Germany Bulletin – May 2023
Some facts about Germany
· Germany has a population of eighty-four million people.
· Germany is the seventh-largest country in Europe. Covering an area of 137,847 square miles, of which 34,836 square miles is covered by land and 3,011 square miles contain water.
· The economy of Germany is a highly developed social market economy. The country accounts for about 28% of the euro area economy according to the IMF.
In Germany the share of industry in gross value added is 22.9 per cent, making it the highest among the G7 countries. The strongest sectors are vehicle construction, the electrical industry, general engineering, and the chemical industry.
· Germany is one of the world’s largest motor car producers. China and the USA are the two biggest export markets for German cars.
· Germany is also a founding member of the European Union and the Eurozone.
GERMAN ECONOMIC INDICATORS May 2023
Germany is the fourth largest economy in the world after the United States, China and Japan and the largest economy in Europe. It is the third largest export nation globally: With 70% the service sector contributes the largest part to the country’s GDP.
The German Market - Europe’s Economic Hub
Germany can be seen as one of Europe's best-performing economies. Small and medium-sized enterprises drive the market and dynamic trade relationships within Europe and beyond offer plenty of business opportunities.
Germany's economic policies enhance a broad and competitive industrial environment with a strong focus on innovative future technologies. Many small and medium-sized companies utilise this potential, making them leaders in their respective markets. Across industries large and small, German products are worldwide export hits.
Medium-sized enterprises form the heart of the German economy. In other words, companies with an annual turnover of less than fifty million euros and less than five hundred employees. This sector of the economy embraces 99.6 per cent of German companies. More than 1,000 of these companies are so-called hidden champions, i.e., often publicly less well-known international market leaders.
The German government has slightly increased its economic forecast for this year. It now expects GDP to increase by 0.4% in 2023. In January it had still assumed 0.2%. Economic indicators such as industrial production, new orders, and the business climate point to an economic revival in the further course of the year.
The gross domestic product (GDP) was unchanged (0.0%) in the first quarter of 2023 compared with the fourth quarter of 2022 after adjustment for price, seasonal and calendar variations, after decreasing at the end of 2022 (by a revised -0.5% in the fourth quarter year on year; before: -0.4%). The final consumption expenditure of both households and government declined at the beginning of 2023, according to the Federal Statistical Office (Destatis). Positive contributions, in contrast, came from capital formation and exports.
Across Germany, consumer prices rose by an average of 7.2% in April compared to the same month last year. The very slow drop in inflation in April can be seen as a clear indication that price level stabilisation will be a long process. Food prices, in particular, again rose at an above-average rate of 17.2% compared to the same month last year. These are and will continue to be the key drivers of the inflation rate in the coming months. On the other hand, the rise in energy prices, up 6.8% year-on-year, was again well below the overall inflation rate, as was the case in March and even April. Petrol prices continue to fall to a level not seen since before COVID.
German Exports 2023
Exports increased in the first quarter. However, there was a significant damper in March. At 129.7 billion euros, exports in March were 5.2% lower than in February of the current year, but 5.0% higher than in March 2022. The drop in exports was particularly marked in the two most important individual markets namely the USA (-10.9%) and China (-9.3%), especially with regard to motor car sales, with strong competition coming from Chinese manufacturers like NIO and BYD, and Tesla. The German luxury car segment held up really well in both countries, however.
The German car manufacturers are lagging behind the Chinese car manufacturers in terms of electric cars and have much ground to make up. Hence the loss in turnover for the German car OEMs, coupled with price-cutting activities in that country by the Chinese OEMs to gain more market share. Nevertheless, all the German car manufacturers still boasted massive profits for the first quarter of 2023.
The further outlook is however somewhat subdued. Geopolitical risks, recurring turbulence on the financial markets, continuing high inflation rates and loss of purchasing power, as well as increased interest rates are causing major uncertainty in the foreign business of German companies.
German companies nevertheless remain focused on the growth market of China: 71 per cent of companies intend to increase their investments in the People's Republic of China. Nevertheless, the optimism is waning somewhat as the business environment becomes more difficult.
Employment and Salaries 2022/3
The number of unemployed in Germany fell only slightly in April due to a marked slowdown in the economic recovery in the spring. The unemployment rate stagnated and was unchanged at 5.7% in April. One of the reasons for this is the sluggish economy. Overall, however, the labour market is in stable shape.
Strikes in most sectors of trade and industry, and in the public sector including transportation have been taking place in the first quarter of 2023 and are not yet over. The unions have called their members out for strike action in order for a better bargaining position for all. Many salary disputes have been settled successfully, some not, for example the German State railway.
According to recent studies, Germany ranks as the top investment location in Europe. Along with its relative economic stability, Germany is the largest domestic market within Europe, creating a large and stable customer base for foreign investors. Germany's integration into the world economy also allows companies to gain and share knowledge, products, and employees within a global network. A number of Agencies including the GTAI assist foreign companies in setting up in Germany.
Germany is one of the world’s premier locations for organising international trade fairs. Two-thirds of the major global industrial events take place in Germany. Ten million visitors attend around 150 international trade fairs and exhibitions each year.
If you are looking to recruit experienced sales staff to enable you to exploit new or existing markets within Germany, the UK, Europe or further afield, please call us for a no-obligation discussion.
*Please note the information contained herein is an aggregate of news stories, by commentators widely available - readers should seek independent verification, and this in no way represents the views or opinions of Standley Associates.
We will continue to check the news reports and will provide monthly summaries of the trends