The rate of business activity in NI is still stalled, but the speed of the fall has slowed.

However, the building sector has again been hardest hit as shown by he release of October data from the Ulster Bank Northern Ireland PMI.

The latest report - produced for Ulster Bank by Markit - showed business activity in the Northern Ireland private sector economy decreasing at the slowest rate since March.

This was signalled by a rise in the seasonally adjusted Business Activity Index from 46.4 to 47.9 in October.

Commenting on the latest survey findings, Richard Ramsey, Chief Economist Northern Ireland, Ulster Bank, said: "The latest PMI survey of local private sector firms highlights key trends at a headline level.

"Private sector output is still falling; the rate of inflation is accelerating; and the level of job losses has stabilised.

However, construction, retail and services are still contracting at a rapid rate and new orders are suggesting no improvement is expected anytime soon.

"This highlights the domestic growth challenges facing the Northern Ireland economy.

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"It is also noted that local construction firms are continuing to shed jobs at a rapid rate whereas the services and retail sectors are experiencing modest rates of job losses," he said.

"Another key theme over the last four years has been the divergence in performance between the UK and Northern Ireland economies. In terms of output, however, the October survey reports the narrowest differential since June 2008.

"That said, the UK private sector is still growing, albeit at a much weaker rate than September, whereas local firms are still experiencing falling levels of output," he said.

"At a regional level, three regions alongside Northern Ireland reported falling levels of output in October.

"Wales posted the sharpest rate of decline, marginally ahead of Northern Ireland. Wales also recorded the fastest rate of job losses of all the UK regions last month.

"Meanwhile, Northern Ireland was broadly in line with the UK at just below the 50 mark, signalling a marginal decline in employment levels," he added.

"Beneath the headlines it is clear that contrasting fortunes are being experienced at a sector level.

"Local manufacturing firms are bucking the wider global trend with a significant improvement in output last month. The manufacturing PMIs for the Euro zone and the UK both saw output below the 50 threshold indicating contraction.

"Conversely, Northern Ireland's manufacturing sector posted its fastest rate of output growth since February 2007. This marks the first time Northern Ireland's manufacturing industry has outperformed the UK manufacturing PMI since May 2009.

"Local firms are also reporting robust growth in new orders and employment is rising at its fastest rate since April 2007. These encouraging figures for one month should be treated with caution as context is important.

"Throughout the recession local manufacturing has suffered more than the UK as a whole which perhaps explains the rebound. Furthermore, the deteriorating global prospects will make sustaining this growth extremely difficult," he said.

(CD)