With the March BNZ-BusinessNZ Performance in Manufacturing Index reading for the region back to 47.8 points from 57.2 in February, the region had slipped into contraction, he said.
''Given that the January PMI was back at 48.1, we have to acknowledge we are certainly seeing peaks and troughs in the survey assessments.''
A review of the March sub-indices had production and new orders evaluations sitting right on 50 points. Deliveries, employment and finished stocks were considerably weaker at just 42.9 points, he said.
In February, the survey feedback on demand-related elements suggested the region was moving further into expansion but that appeared not to have occurred.
''Once again we see mixed responses, both positive and negative, within the food and beverage and metal industries and also some slippage in confidence on the boat-building and wood and paper fronts,'' Mr Scandrett said.
Otago-Southland was the lowest of the four regional areas. Northern was on 50.7 points where a reading above 50 indicates expansion. Central was the highest on 60.9 points, and Canterbury-Westland was 59.1.
The New Zealand PMI was 53.4 points which BNZ senior economist Craig Ebert said was a solid result. Overall, the country's manufacturing sector was continuing to improve, having been through a bumpy patch through the middle of last year.
The reservation he had about the latest PMI was food processing being clearly the strongest part of it.
''To the extent this reflects higher-than-normal meat processing for this time of year, as farmers respond to drought, then we should be wary of a hangover in this component of the PMI in coming months.''
But for dairy product manufacturing, the drought would be a negative in the survey already, Mr Ebert said.
