The BNZ Capital and Business New Zealand performance in manufacturing index showed the region had improved slightly in April to 40.4, up from 37.6 in March.
However, the result was still below the national figure of 43.7, which indicated the sector continued to contract, she said yesterday.
An index reading of above 50 indicates the sector is expanding and below 50 that it is contracting.
"One particularly positive result for the Otago-Southland region is shown in the measure of new orders received, at 43.5, up from 36.4 in March and above the national average of 38.9."
The region was the only one to show an improvement in activity in forward orders, Mrs Hudson said.
Asked for a reason, she said that a lack of forward orders meant people had run down their stock.
But as orders came back in, manufacturers were building up their activity.
"This small increase for the region is a small glimmer of light, particularly after last month's result.
"But it should continue to be viewed with caution until the increases can be sustained for several months," she said.
BNZ senior economist Craig Ebert said there were encouraging trends shown in the national index results.
"Every improvement has to start somewhere, even if in small steps."
In New Zealand's case, the index "recovery" would seem to be in good company with the large majority of global manufacturing indices also seeing a lift in the past two months.
"Still, we need to be careful about extending the trend in the indices when the economic and financial backdrop remains as problematic as it is.
"If all we're seeing in the recent indices rebounds is simply a bit of catch-up, or relief production, a bigger slump could yet transpire."
