In 2023 and 2024, net job creation was entirely due to incumbent firms expanding their workforces. This contrasts with most of the period since the global financial crisis, where the majority of net job creation came from entering firms creating more jobs than exiting firms destroyed.

This year we have introduced analysis of business dynamism by industry, showing that although dynamism is lower in every industry than in 2001, there is variation in the levels and recent trends.

The latest year's statistics continue the longer term trends:
- business dynamism that is lower than 20 years ago
- productivity growing faster for the most productive firms than the median
- average markups the joint highest since our series began.

Today we published our annual bulletin Trends in UK business dynamism and productivity: www.ons.gov.uk/economy/econ...

To help users explore the rich detail in the business dynamism statistics, we are also piloting an interactive dashboard: ons-dynamism.shinyapps.io/lbd_dashboar...

We also asked about average days worked from home by managers and non-managers. In all subsectors, managers were at least as likely as non-managers to use hybrid work, and in most cases were more likely. Average management practice scores were usually higher in organisations that use hybrid working.

Scores on underperformance were strongly influenced by the proportion of organisations that reported having no underperformance. These scored zero under our scoring metric, because we assume that all organisations must have some examples of underperforming staff.

While the public sector generally scored well on KPIs, Targets scored similarly to the private sector, with the lack of financial incentives for achieving targets reducing public sector scores. Despite prior question testing, the concept of KPIs was not consistently understood across subsectors.

Given the pilot nature of the PSMPS and the diversity of subsectors, it is worthwhile looking at the responses in more detail. Responses on Employment Practices were more likely to score highly across most of the public sector, but in Education the lack of promotions lowered the score.

There are similarities and differences between and with the sectors. The mean management practice scores were close: 0.56 for the public sector and 0.55 for the private sector. But the spread was wider in the private sector, where firms were more likely to receive the highest or lowest scores.

By linking waves of the Business Insights and Conditions Survey in 2024 onto MES 2023, we also found that among firms who hadn't adopted AI in 2023 but said they planned to in 2024, the firms with stronger management practices were more likely to follow through on those plans.

The positive relationship between management practices quality and technology adoption remained after controlling for other business characteristics such as size and industry.

Firms with higher management practice scores were more likely to adopt advanced technologies. 20% of firms in the top tenth of firms by management practices quality used AI in their methods or processes in 2023, compared to 2% of firms in the lowest tenth.

Conditional adoption rates give clues about which advanced technologies might be required or complementary to adopting others. 91% of the firms using AI in 2023 also used cloud-based computing systems and applications, and 83% of the firms using AI also used specialised equipment.

There was a small increase in job destruction from firm exits in 2023 compared to 2022, but this was offset by a small decline in job creation from new firm entry.

Business dynamism should support growth, as more productive businesses expand while less productive ones shrink or close. We measure dynamism as the proportion of jobs created or destroyed each year: added together they give the reallocation rate, which is lower since the financial crisis.

Our estimate of mean cost markups, a measure of market power, was 1.27 in 2022. This is unchanged from 2021 but the joint-highest since the start of our series in 1997. Over that period, there is a trend of increasing dispersion, with the highest markups increasing the fastest.

Longer term, increasing dispersion in firm-level productivity means that the UK has been increasingly reliant on its 'frontier' firms to drive overall productivity growth since the financial crisis.

Workers in firms at the 90th percentile of labour productivity produced 3.59 times as much output as workers in median productivity firms in 2022.