Southern manufacturing leads growth

Growth in manufacturing demand has hoisted Otago and Southland into the top expansionary spot around the country for February.

Otago-Southland plunged from a buoyant 60 in December to contraction in January at 48.4 but has bounced back to 57.2, led by a sub-index of new orders, Otago Southland Employers' Association chief executive John Scandrett said.

''With the solid 8.2-point comparative gain to our February result we have not only moved back into an expansionary mode, but the improved 57.2 reading has us once again taking the lead on national manufacturing index outcomes,'' Mr Scandrett said.

The monthly BNZ - Business New Zealand performance-in-manufacturing index - with readings under 50 being in contraction and above in expansion - had the national figure for February at 56.3.

Otago-Southland's 57.2 was followed by Northern and Central regions at 53.6 and 53.8 respectively and Canterbury/Westland at 52.4.

Economic Development Minister Steven Joyce said there were still challenges for some parts of the manufacturing industry but calls that manufacturing ''is in crisis'' was clearly not the case.

''It's a political position that is not being reflected across all manufacturing industries. There are areas thriving, even against the real strength of the dollar.''

Asked if he had concerns about any parts of the manufacturing sector, Mr Joyce turned it around to talk about the opportunities New Zealand had in some high-valued industries such as engineering and food processing.

He had visited two Dunedin manufacturers yesterday who had demonstrated how design and engineering of their products was driving their success.

Business New Zealand's executive director for manufacturing Catherine Beard said it was encouraging February's result exhibited stronger activity, most likely due to increased activity often associated with construction, such as the Canterbury rebuild or increased renovation work throughout the country.

''Given a large proportion of New Zealand's domestic manufacturing activity is dependent on the construction sector, stronger demand for products such as paint, concrete, fixtures/fittings and related equipment will obviously provide the sector with a welcome boost,'' she said.