Service providers were boosting their workforce levels at levels unseen for nearly 20 years, according to the Ulster Bank Northern Ireland Growth Tracker.
It found new orders had gone up markedly in the month, with firms taking on extra staff at the fastest pace in over a year to deal with backlogs.
In addition, inflation was showing signs of easing, lifting the burden of steep rises in overheads.
Richard Ramsey, chief economist Northern Ireland, Ulster Bank, said: “The Northern Ireland private sector started the second half of the year in a similar vein to how it ended the first, with marked improvements in output and new orders.
“In fact, the expansion in business activity in Northern Ireland was the strongest of all the UK regions and nations covered by the report.”
He said the picture wasn’t “overwhelmingly positive” as manufacturing and services — a sector covering businesses from estate agents to restaurants — were driving growth, while retail and construction were less buoyant.
Employment was going up as companies reacted to bigger workloads, “with service providers ramping up staffing levels to an extent unseen for nearly 17 years”.
But he added: “That said, companies across the private sector saw outstanding business expand again, suggesting that employment and output will need to be raised further in the months ahead to try and keep on top of workloads.
“More good news for firms in Northern Ireland was that the ramping up of demand in the private sector has not been accompanied by building inflationary pressures.
“On the contrary, both input costs and selling prices rose at weaker rates in July.
“While nothing should be taken for granted, everything seems set up for firms to have a successful second half of 2024.”
Ulster Bank chief economist, Richard Ramsey
According to the report, the expansion in output in Northern Ireland was the sharpest of the 12 UK regions and nations covered. Where activity increased, companies generally said higher new orders were to thank.
Retail, manufacturing and services all saw activity rise, though it was down for construction.
New business increased for the seventh consecutive month and at a sharp pace that was stronger than the average across the UK as a whole.
Companies expect continued increases in new orders over the coming year to support growth of output.
As a result, business sentiment remained elevated, with nearly 40% of respondents predicting a rise in activity over the next 12 months.
Marked increases in new orders led companies to expand employment for the 19th month running in July. Moreover, the rate of job creation was solid and the most marked since April 2023.
Staffing levels rose at the fastest rate of all UK nations and regions covered, with backlogs expected to keep going up.
The pace of inflation eased to a five-month low, and output price increased rose at a slower pace.