However, while several of the gains in the monthly BNZ/Business New Zealand survey are positive, BNZ senior economist Craig Ebert cautioned they were very much the "light at the end of tunnel" for manufacturers, with three of the five main indexes in the survey in contraction.
"There are increasing signs the sector is beginning to see some light at the end of the tunnel. Of course, its still a long, dark tunnel," Mr Ebert said in a statement yesterday.
A survey reading above 50 indicates manufacturing is generally expanding, while a reading below 50 reflects decline.
Otago-Southland had recovered from posting a sub-40 result in May and its climb to 48.8 in June was its highest manufacturing level since December last year.
Otago Southland Employers Association chief executive John Scandrett said while Otago-Southland logged an improvement, "many businesses were still struggling" which highlighted more volatility was ahead, such as the Treasury prediction of a rise in unemployment to 8%.
"Contraction is just at a slower rate than it was two or three months ago," Mr Scandrett said.
He noted that in June 2007 and 2008, Otago manufacturing was at 48.3 and 47.9 respectively, in contraction, compared with June 2006 when it stood at 60.4.
The "big jump" in the new orders index, its biggest in the survey history, from 45 to 52.2, gave hope of "some locomotion in activity before too much longer", he said.
Nationally, the seasonally adjusted reading was up slightly to 46.2, with Northern and Central (North Island) districts both in decline, while Otago-Southland and Canterbury Westland posted gains to both sit on 48.8.
Business NZ chief executive Phil O'Reilly said in a statement there were various aspects of the June result which "may point towards a stronger second half of the year for New Zealand's manufacturing sector".
Mr Ebert said a pick-up in orders would gel with improving signs globally in the areas hit hardest by the manufacturing slump, particularly the Asia region.
