After six consecutive months of leading the country in the BNZ-BusinessNZ performance in manufacturing index, Otago-Southland finds itself at the bottom of the list in February and the figures point to a contraction in the region's manufacturing.
Otago-Southland recorded 44.7 points in January, where below 50 shows an industry in contraction and above 50 indicates an industry enjoying a phase of expansion.
Northern recorded 53, Central was 61.4 and Canterbury-Westland was 52.
Mr Scandrett said he believed the latest figures demonstrated supply had temporarily outstripped demand and there was no need for worry.
"Looking back at the previous six months, we have had high new orders and increased production expectations with the high levels in anticipation of the orders coming through. They have come through and now there is stock on hand.
"The market, in my view, is just taking a breather. It was always going to be a relatively tough call on pinpointing exactly when the manufacturing sector analysis would deliver us a result that saw Otago-Southland slip below the national lead position we have enjoyed for six months in a row."
The food and packaging sub-sectors continued to record positive growth patterns but those were outweighed by the slippage in textile and wood product activity, he said.
There were signs too that an ongoing slowing of the Australian economy was at least partially responsible for the manufacturing contraction in the South, Mr Scandrett said.
Nationally, the index reading was 55.7 points, up from 50.8 in January and the highest monthly value since April 2010.
BusinessNZ manufacturing executive director Catherine Beard said the strong increase in activity for February was welcomed but whether that indicated a true turnaround in the fortunes of the manufacturing sector remained to be seen.
The fact that key sub-indices of production and new orders experienced a large lift was a good indicator for proper growth in the sector, Ms Beard said.
