However, according to InterTradeIreland's All-island Business Monitor, southern companies are suffering more with 72% reporting a decline compared to 42% of Northern Ireland companies.
The sectors that are worst affected are construction, manufacturing and retail distribution.
The extensive survey which involves telephone interviews with 1,000 owner/managers, in Northern Ireland and the Irish Republic, was undertaken last month and covers the period January to March.
InterTradeIreland's Strategy and Policy Director Aidan Gough said: "The picture across the island is of a marked differential emerging in business performance North and South.
"There are signs that the recession is bottoming out in Northern Ireland where fewer firms reported falls in turnover than last quarter. However, southern companies continue to be more pessimistic," he said.
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While over a quarter (26%) of businesses cut jobs over the past three months, the pace of decline appears to be slowing in Northern Ireland with 14% of companies shedding staff. This figure is significantly higher and rising among southern companies at 38%.
Labour and energy costs and rates were cited as the biggest challenges to company competitiveness.
Almost half (45%) of businesses admitted that they had reduced their prices due to the fall off in demand for goods and services. This trend was again higher in the South (60%) compared to the North (30%).
Interestingly, 5% of businesses claimed that the economic downturn was actually having a positive impact of their business. Almost all of these were based in Northern Ireland reflecting the competitive edge arising from the weakness in sterling.
Cash flow continues to be a big issue. Around half (51%) of businesses said that it was taking longer for their customers to pay.
A similar number who had successfully applied for credit (49%) claimed that the process was more difficult and took longer.
Thirty per cent of southern companies said they only got a proportion of what they had applied for.
Mr Gough concluded: "It is too early at this stage to make any predictions regarding the timescale for economic recovery. The results of our next survey are due in July and will give us a clearer picture.
"InterTradeIreland is taking a proactive stance to support businesses and restore their confidence with initiatives such as our 'Time For Business' Roadshow, our new First Stop Shop Service and Trade Accelerator Voucher Scheme," he said.
(BMcC/JM)
