Changing spatial patterns of the service industry in Germany: evidence on functional differentiation in the urban system

The service economy is a key driver of regional development, yet little is known about how different service activities contribute to regionalisation processes within large city regions. This paper analyses employment dynamics across Germany’s 48 large city regions between 2012 and 2025. Building on the service typology of Glückler and Hammer (2011), occupations are grouped into knowledge-intensive consumer services (KICS), knowledge-intensive business services (KIBS), technology-intensive knowledge-intensive business services (TKIBS), operational consumer services (OCS), and operational business services (OBS). Using employment data from the Federal Employment Agency and principal component analysis, the study examines spatial development patterns and functional dimensions of service-sector growth. The results reveal substantial differences between service categories. While knowledge-intensive business services remain closely associated with metropolitan environments, employment growth increasingly extends into commuter areas beyond urban cores. Moreover, the principal component analysis identifies five functional dimensions that cut across conventional service categories: knowledge-intensive urban services, commercial and business services, care and infrastructure services, urban security and facility services, and finance and insurance services. ... mehrThe findings suggest that contemporary service-sector development is structured less by traditional sectoral classifications than by broader city-regional functional regimes. Understanding metropolitan transformation therefore requires a stronger focus on functional interdependencies across entire city regions.