BUSINESS activity in Northern Ireland's private sector increased at its fastest rate in 16 month during January.
The latest Purchasing Managers' Index (PMI) produced for Ulster Bank recorded faster rates of growth for output, new orders and employment during the month.
Meanwhile, the rate of cost inflation remained marked but firms were only able to increase their output prices at a marginal pace.
It was the third month running that the rate of growth in new orders had picked with all sectors apart from manufacturing reporting increases.
And businesses reported backlogs in work for a third successive month.
Higher workloads contributed to a further increase in employment while the pace at which staffing levels rose was the fastest since June 2014.
Northern Ireland companies continued to record marked increases in input prices during January, often reflecting higher staff costs. Services and construction posted the strongest rises in input prices.
Ulster Bank's chief economist in the north Richard Ramsey said: “January’s incoming economic and financial market news had more than its fair share of doom and gloom. While business conditions have deteriorated within a global context, Northern Ireland’s private sector has reported a very encouraging start to the new year."
Mr Ramsey said the growth "matched the long-term average growth rate that pre-dated the downturn".
"Furthermore, the pace of job creation was above the UK average for the first time in 20 months," he said.
"Hiring intentions are expected to remain strong given that backlogs of work (not commenced or completed) are rising at their fastest rate in eighteen months. The only major disappointment was the decline in export orders, the first fall since August last year. This highlights a challenging environment for manufacturers including, until very recently, the strength of sterling against the euro.
“At an industry level, the services sector was the star performer in January. Service sector activity expanded at its fastest rate in fourteen months and at a faster rate than for the UK as a whole.
"However, Northern Ireland’s service sector growth rate remains below the pre-downturn long-term average. Order books and staffing levels within Northern Ireland’s service sector firms also increased at faster rates than the UK average and above their respective long-term average growth rates that preceded the recession.
"The retail sector has rebounded from a disappointing fourth quarter with sales, orders and employment all on the rise. Indeed, retailers reported the fastest rate of employment growth of all sectors."
He said while construction firms reported rising output and orders, growth was slower than in December.
"Meanwhile staffing levels expanded at their sharpest rate since May 2014. This largely reflects work undertaken in Great Britain and not Northern Ireland," added Mr Ramsey.
"Manufacturing remains the key area of concern. Local firms reported a modest rise in output in January but new orders slumped. Manufacturing orders have been flat or falling in four of the last five months. January’s decline represented the sharpest fall since September 2012. In light of this, it is not surprising that manufacturing reported job losses for the fifth month in a row."
