Published Monday, 12 November 2012
For 10 months in a row, firms have fired more people than they've hired. (© UTV)
Data from the Ulster Bank also revealed that the decline was the steepest witnessed in any region in the UK - with twice as many private sector firms reporting a drop in output than those recording growth.
This had a knock-on impact on jobs, with more companies firing than hiring in October - the tenth successive month that has been the case.
Ulster Bank's Purchasing Managers' Indexes (PMI) provides a benchmarked snapshot of economic activity.
It found that the construction and services industries are those suffering most in the current economic climate.
But the latest report did provide some good news, with manufacturing firms reporting an increase in new orders.
Overall the PMI figures - produced for the Ulster Bank by economists Markit - saw the seasonally adjusted Business Activity Index fall to 40.5 from the 44.6 recorded in September.
The report encapsulated the stress many Northern Ireland companies are under - noting that the cost of production continues to rise, with higher fuel costs partly to blame, while companies are at the same time still being forced to drop selling prices just to be competitive.
Richard Ramsey, Ulster Bank's chief economist in Northern Ireland, said:"In Northern Ireland, positives included local manufacturing firms reporting an increase in new orders, compared with a decline for the UK overall, and local manufacturing firms increasing prices charged on their goods for the first time in three months.
"They also experienced an easing in input cost inflation. But overall, Northern Ireland private sector firms reported a difficult month in October.
"Whilst there are still a significant number of firms experiencing growth, there are currently twice as many reporting falling output. As a result, Northern Ireland had the steepest decline in private sector output of the UK regions."
Mr Ramsey continued: "The pick-up in the rate of decline in both output and employment was due to the construction and services industries. The construction sector posted its fastest rate of employment decline in almost two years last month.
"These job losses, coupled with a reduction in staffing levels within the service sector, resulted in the steepest decline in overall employment levels since November 2010.
"This latest feedback from the Northern Ireland business community on private sector conditions confirms the significant challenge facing policy-makers and the local economy", he added.
"Pro-economy, pro-business measures are extremely welcome. The economy also needs a larger stimulus, and this is the context within which a lower rate of corporation tax is being sought."
© UTV News