Our figure of the month 03/2017: Number of companies in service sections rises while concentration process in trade, industry and accommodation and food service continues
While the number and share of companies in the service sections of professional, scientific and technical activities and administrative and support service activities is rising, the share of the wholesale and retail trade section is decreasing. The number of companies in the manufacturing section and accommodation and food service activities are also decreasing.
Between 2006 and 2014, the total number of companies in the manufacturing and service section in Germany increased by almost 100.000 or approx. 3% to 3.65 million companies in 2014.
The development within different economic sections was, however, very diverse. The wholesale and retail trade section plus the repair of motor vehicles and motorcycles suffered the highest loss of all sections. There, the number of companies has been reduced by over 88,000 (or 12%) within eight years. This can be explained by the advanced concentration process within the trade sector as well as the rapid growth of internet trading. The latter poses an increasingly severe problem, especially for small retailers who do not belong to any trade chain and often leads to a closure of their businesses. A similar picture can be found within the accommodation and food service section. Hotel groups and chains of restaurants continuously gain market shares while more and more small family businesses are closing down. In this section, the concentration process results in the reduction of companies by approx. 23,000 or 9% between 2006 and 2014. A similar development can be monitored in the manufacturing section.
The winners are located in those service sections that mainly deliver services for businesses. The number of companies in the sections of professional, scientific and technical activities has risen by around 56,000 within eight years, which means an increase of companies by 12%. Within the section of companies who deliver administrative and support service activities, the increase has been exceptionally dynamic: The number of companies has risen by a third, which equals 53,000. An even higher increase in the number of businesses could only be registered in the field of energy suppliers. Here, the number of companies increased by over 300% between 2006 and 2014, which is, however, mainly due to the development in the renewable energy sector with high state subsidies for private producers of renewable energy granted.
Further analyses of the development of company demographics with regard to economic sections and divisions, taking into account the establishment as well as closure of businesses can be found in the GWS Discussion Paper 6/2016. An update of this paper will be published in the near future.
Other figures can be found here.