Northern Ireland will soon emerge from recession, a report predicted today.
The fall in the amount of private business transactions was the lowest since January 2008, the Ulster Bank research added.
Despite this average charges for services fell sharply and the cost of raw materials or labour rose at its most marked rate for four months.
Richard Ramsey, Northern Ireland economist at the Ulster Bank, said: "The latest Purchasing Managers' Indexes (PMI) survey offers further encouragement that Northern Ireland's private sector should return to positive growth before the end of the year.
"While the majority of firms are still experiencing decreasing levels of output (sales), the latest survey indicates a significant rise in the number of companies reporting growth."
According to the National Institute for Economic and Social Research the UK's recession is over, with the economy returning to growth for the first time since May last year.
However Northern Ireland Employment Minister Sir Reg Empey previously warned of the danger of mounting job losses and there is pressure to cut official costs like civil servant posts.
The Ulster Bank study linked the decline in private sector business activity to reduced levels of new work and unfavourable trading conditions.
But Mr Ramsey said: "More than one in four firms reported a rise in business activity in August, a figure not seen since October 2007. It is a similar story with new orders, with 30% of local companies signalling a rise in new incoming business. This represents the largest share in two years.
"Despite this improvement Northern Ireland remains the only UK region still waiting to return to growth."
Staffing levels were reduced for the 18th successive month in August. Redundancies and the non-replacement voluntary leavers were cited by survey participants as measures used to lower employment numbers.
Prices charged reduced sharply despite rising costs linked to the cost of raw materials and oil-related products.
Mr Ramsey said: "At a sector level, the most noticeable difference between the performance of the Northern Ireland and UK economies is within services (excluding retail).
"In the UK, the services industry is currently the strongest performing sector whereas in Northern Ireland service sector firms reported the sharpest fall in output of all the sectors."
He added: "On a positive note, the pace of job losses continues to ease, with local firms reporting a more moderate decline in employment levels relative to their UK counterparts for the third month in a row. Northern Ireland's construction sector continues to bear the brunt of the ongoing job losses."