Employment levels here have fallen for the first time in four years while prices have risen at their sharpest rate since 2023.
The Ulster Bank growth tracker for February shows companies lowered staffing levels during the opening quarter of 2025.
Respondents to the survey cited increasing costs for employers, including the upcoming rise in national insurance, as the reason for the cuts.
Prices also rose, with higher staff, energy and material costs all contributing.
The rate of input cost inflation has now gone up for four months in a row, while selling prices have also risen. Respondents cited the national insurance increase as a reason.
New orders have fallen for four consecutive months, although the decline in February was less steep than in January.
On the positive side, business confidence did increase last month, albeit while remaining low — 28% of respondents said they were optimistic, while 20% said they were pessimistic.
NatWest chief economist Sebastian Burnside said: “A first reduction in employment in four years added to the sense that the Northern Ireland private sector is going through a challenging period at present.
“Firms acted to lower staffing levels amid further declines in output and new orders, but also to try and limit overheads before the impending increase in employer national insurance contributions.
“In fact, both input costs and output prices rose at the sharpest rates in almost two years, with costs up more quickly in Northern Ireland than anywhere else in the UK.
“By sector, the overall downturn continued to be driven by the construction and retail categories.”
Sebastian Burnside
The Ulster Bank regional growth tracker is compiled by S&P Global and surveys 200 local companies which represent different sectors of the economy.