The economic survey was conducted by the economics weekly, Wirtschafts Woche, together with the Initiative New Social Market Economy, which is supported by the Employer's Association for the Metal and Electrical Industry.

The survey looked at a total of 117 factors to rank the cities, including the usual economic indicators such as income, unemployment, investment levels and buying power. However, the study also looked at aspects such as cultural events, and even the density of doctors. The factors were then sorted into six categories -- employment, wealth, finances, quality of life, economic and social structures.

Munich has highest incomes in Germany

Munich made it into the top spot thanks to the combination of high incomes and low unemployment. Residents have an average annual wage of 17,148 euros ($22,000), the highest in the country. The unemployment rate of 9.8 percent is significantly lower than the study's average of 16 percent.

There is a negative side to Munich though -- the city's residents have some of the highest rate of debt in Germany.

Other top ranking cities were Düsseldorf, Mainz, Karlsruhe, Mannheim, Münster and Cologne.

Low rankings for eastern Germany

The former East German city Rostock came in last place on the overall rankings. With the exception of Dresden, all other eastern Germany cities in the survey came in the bottom ten.

However, the survey found that several eastern Germany cities such as Magdeburg, Leipzig and Chemnitz showed a massive improvement in their economic performance, which meant they scored well for economic vitality.

Dresden is Germany's most dynamic economy

The state capital of Saxony, Dresden made the biggest improvement over the past year, jumping from 30th to 10th place. This makes Dresden the most economically vital place to live in Germany.

In contrast to the 2005 survey, it's no longer just the new German states at the bottom of the list.

This year, the western German cities of Gelsenkirchen, Lübeck and Berlin are all in the bottom five.

Thanks to its high unemployment rate of 21.5 percent, and low average wage of 23,460 euros, Germany's capital Berlin landed on place 48 in the overall index.