After the financial and euro debt crisis, not only the economy in the western industrialized nations has managed to stage a strong recovery. Labour markets are also experiencing considerable relief. In most major industrialized nations, unemployment rates are now lower than they have been for many years. In Germany, the unemployment rate is actually lower than it has ever been. Even if the unemployment decline in other countries is less pronounced than in Germany, a similar trend can be noted in the United States and Japan. The unemployment rate in these major industrialized nations has now also fallen below its pre-crisis level, in Japan even significantly.
While labour markets have now fully recovered from the financial crisis, the same cannot be said for some other indicators: for example, capacities of companies in the manufacturing sector in Germany as well as in the United States and Japan are still not being utilized to the same extent as some of the time before the financial market crisis. While in the 1970s and 1980s capacity utilization in the USA was still comparable to the generally stable trend in Germany, capacity utilization after this period lagged noticeably behind that of Germany. In the United States, a visible recovery in the utilization of available capacities can also be noted since the financial crisis, with this recovery still continuing. Nonetheless, current utilization levels are still trailing way behind those of the 1990s. A distinct downward trajectory can be seen here over a long-term horizon. This is even more pronounced in the case of Japan.
Moreover, of these three countries, Germany was the only one in which net production of companies in the manufacturing sector was able to grow faster than gross domestic product (GDP). In Japan and the United States, by comparison, the growth pace in the manufacturing sector lagged behind that of aggregate economic development. However, in Japan this was attributable to the comparatively weak performance of the manufacturing sector, while in the USA it was more attributable to the growth of the services sector, which was way above the market average.
Hence, German economic growth in the wake of the financial crisis was largely attributable to the strong rise in demand for goods from German industrial companies. A further transformation towards an even stronger service economy has therefore not taken place in Germany. This compares with Japan and especially the United States where the service sector has assumed a distinctly more important role for economic development.
A further reason for the success of German industrial companies was that they were able to relocate cheap mass production to cost-efficient emerging markets from a relatively early stage, with the country concentrating instead on value-creating goods and innovative products. This enabled German industry to avoid direct competition from cheaper production locations and at least maintain, if not actually consolidate, its position on the global market. If, however, the success of German industry on global markets were to decelerate noticeably in the future, the German economy would still have to face a major transformation that other industrialized nations have already mastered.