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The seasonally adjusted national index for June was up 0.7 points from May to 53.3 and the sector has now been in expansion for 21 consecutive months, according to the latest BNZ-Business New Zealand performance of manufacturing index.
An index reading above 50 is expansion and below, contraction. Otago-Southland booked 48.1 in May and 48.8 for June.
Otago Southland Employers' Association chief executive, John Scandrett, said the ''dent'' in the June survey outcome for Otago-Southland was from production not moving through to customers in desired volumes or in a timely fashion.
''The June index, as we saw the previous month, has again produced feedback of inventory build tracking out of step with new orders and deliveries,'' Mr Scandrett said.
June activity levels were mixed for the Otago Southland food and beverage and selected machinery and equipment operators.
As happened in May, the textile, clothing and footwear manufacturers reported ''solid results''.
The Northern region declined but booked 50.6, the North Island central region fell to 52.8, while the Canterbury Westland region was unchanged at 56.6.
Business New Zealand's executive director for manufacturing, Catherine Beard, said the slight lift in expansion levels was welcome, albeit with a few headwinds.
''The fundamentals of both the manufacturing index and other indicators of the economy still point to positive activity.
''However, the continued strength of the New Zealand dollar, as well as new order levels continuing to fall, mean there are elements of the sector that need to be watched closely,'' Ms Beard said.
Employment levels continue to show more jobs in the sector, while the largest proportion of comments received were still positive, she said.