The April data from the Ulster Bank PMI (Purchasing Managers' Index) report pointed to a sustained contraction in private sector output at the start of the second quarter with inflation of both input and output prices accelerating to new records.

The Northern Ireland survey forms part of a regional series published by The Royal Bank of Scotland Group and NTC Economics, derived from its work for the Chartered Institute of Purchasing and Supply.

"The key theme in the US and European economies is one of slower growth and higher inflation, and NI proves to be no exception in this regard," said Richard Ramsey, Northern Ireland economist with the Ulster Bank.

"With oil prices hitting new record highs and sterling weakness driving up import prices, it is not surprising that input costs for the UK and NI have hit new survey highs.

"NI firms have responded to the rising cost burden by raising output prices at a record rate. However, as this has failed to keep pace with cost inflation, profit margins are under renewed pressure."

Northern Ireland was the only UK region to experience a contraction in business activity in March but, since April, he said the Province has been joined by four others.

"Furthermore, activity amongst UK firms as a whole slowed sharply in April and remains just above the threshold, signalling no change in output.

"The impact of falling workloads has filtered through into the labour market with NI firms recording marginally lower levels of employment for the second consecutive month."

According to the April report, local output contracted at the steepest rate of all UK regions.

The rate at which business activity declined in Northern Ireland was only fractionally weaker than the survey-record pace set in March and was the steepest fall indicated across all 12 UK regions during April.

Firms generally blamed a lack of incoming new work for the latest fall in output. Construction and manufacturing registered the strongest rates of decline.

The rate of contraction in new work received by private sector firms was unchanged from March's record pace and the region also saw the steepest fall of any UK region.

Firms highlighted flagging client confidence as a result of a weaker economic outlook as being the main reason for reduced new business volumes. By sector, construction companies posted the most substantial decline in new business.

Falling workloads and restructuring led private sector firms to reduce staffing levels on average in April.

That contrasted with rising employment across the UK as a whole. However, the rate of job shedding was only marginal and service sector workforces expanded during the month.