Employment numbers rise in June at NI companies, says Ulster Bank report
However, Northern Ireland was the only one out of 12 monitored UK areas to post a rise in employment, although the pace of job creation was slight.
Some respondents to Ulster Bank's survey said previous recruiting difficulties had eased, which allowed them to fill vacancies.
But new orders decreased, although companies were still optimistic about the future, with selling price inflation easing even though there had been a rapid increase in input costs.
And around one-third linked the rise in input costs to increases in wages and employer national insurance contributions.
The tracker's headline business activity index, which measures private sector output, was at 48.2, below the 50.0 no-change mark and indicating a modest fall in output.
Construction was the only monitored sector to buck the wider trend and post an increase in activity.
And retail reported the sharpest decline over the month, with new contractions for both manufacturing and services.
Sebastian Burnside, chief economist for Ulster Bank, said: 'There was good news for the local labour market in June as companies reported an easing of recent recruiting difficulties as they expanded workforce numbers for the first time since January. Moreover, Northern Ireland was the only area of the UK to see employment rise.
'Other aspects of the latest Growth Tracker paint a more subdued picture, however. The expansion in output we saw last month was not sustained into June as new order inflows remained muted.
"Companies are still confident about the year-ahead outlook, however, so we will hopefully see some demand and output improvements during the second half of the year.
'Although output prices increased sharply on the back of further rapid cost rises, there was a further slowdown in the pace of selling price inflation.
"If continued, this could potentially help to support demand improvements over the months ahead.'
The survey found that the growth in employment meant that firms were able to tackle their backlogs of work at a steady pace.
However, the pace of input price inflation was above the series average.
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