• Price pressures led to further reductions in output and new orders
• Inflation remained elevated, but did ease
• Job creation was at its slowest rate in a year and a half

That said, there were further signs of inflation softening, even as firms remained pessimistic about the outlook for the year ahead.

The headline seasonally adjusted Business Activity Index posted 45.4 in August, up from 41.9 in July and the highest reading in three months, but one that nonetheless pointed to a marked reduction in output over the month amid cost pressures and waning demand.

Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: “NI’s private sector contraction continued last month with output/sales and new orders falling for the fourth month running. While the pace of decline in orders and output eased relative to July, the rate of contraction was still marked. Northern Ireland was one of nine of the 12 UK regions to report falling business activity.

“Once again, retailers are bearing the brunt of the downturn, posting the steepest falls in demand as the cost-of-living crisis continues to impact on consumers. Retail is also the only sector not to increase staffing levels last month. On the other hand, manufacturing bucked the wider trend as the only sector experiencing a rise in business activity, posting a marginal increase in output last month.

“Inflationary pressures continue to be cited as a key factor curbing demand. The rate of input price inflation eased to its weakest rate since April last year – but it is worth noting that the price increases that are now being experienced are still stronger than anything reported prior to May 2021.

“Positives were thin on the ground in the latest report. Although employment growth continued, it was at the weakest pace in 18 months, and many firms continued to struggle to find suitable candidates to fill vacancies. The one silver lining with the downturn in demand is that it has eased the pressures on overstretched supply chains. However, this won’t be much consolation to most companies that face an increasingly hostile economic environment and outlook.

“We are in the midst of a cost-of-living and cost-of-doing-business emergency, with rising energy costs the primary driver behind the squeeze on disposable incomes and profitability. Last week, the UK government announced a range of measures to mitigate against the worst effects of the surge in energy costs, and we wait to see and hear how similar measures will be applied to Northern Ireland. The clock is ticking.”