Manufacturers in Otago and Southland found their spirits lifted a little after the July Performance in Manufacturing Index showed a sharp rise from the despondent June result.
The BNZ-Business NZ PMI placed Otago on 49.8 points, up from 38.3 in June.
While it was still below the benchmark 50-point mark between expansion and contraction, Otago-Southland Employers Association chief executive John Scandrett said the latest survey results shook the region out of despondency and lifted spirits a little.
With the July sub-indices for production and new orders sitting on the fringe of expansion, manufacturers would be hoping for some additional upward PMI movement.
''One man's loss is another man's gain, as we see the raw milk oversupply situation where farmers are feeling the pinch in cheese manufacturing activities.
''Where export-based manufacturing is concerned, exchange rate gains are evident in some sectors.
''Packaging is one.''
But despite the gains in some areas, July reports confirmed soft Asian demand for wood products, Mr Scandrett said.
The New Zealand seasonally adjusted PMI was 53.5 in July. Canterbury-Westland recorded the highest regional reading, on 56.3, followed by northern on 52.5, central on 50.0 and Otago-Southland last on 49.8.
BNZ economist Doug Steel said the PMI indicated ongoing growth and had done so for 34 consecutive months.
The rate of progress had slowed from last year.
The PMI average was 53.5 in 2015 to date, compared with the 56 average through last year.
However, growth seemed to be solidifying.
July's PMI result exactly matched the average in the first half of the year, he said.
''It is a solid start to the second half of the year.
''Buoyant production and the balance of new orders to inventory were encouraging signs for further expansion ahead.''
The ongoing growth in the manufacturing sector over recent years had driven up labour demand, he said.
Latest statistics showed employment in the manufacturing sector was more than 10%, or 24,000 people, higher than a year earlier - strong growth.
Manufacturing accounted for more than a third of total employment growth across the country in the past year.
The speed of employment expansion was unlikely to continue but the outlook remained positive, in line with the overall tones of the PMI and the trends in the employment index, Mr Steel said.
