The BNZ-BusinessNZ manufacturing index saw Otago Southland rise from 49.7 points in April to 56.4 points in May, underpinned by food and beverage manufacturers' seasonal production.
Points above 50 reflect expansion, while below 50 is contraction.
Otago Southland Employers Association chief executive Virginia Nicholls said the 56.4 points for Otago Southland was up significantly on the same time last year.
''It's heartening to see manufacturing very positive across all regional categories,'' she said.
The regional categories breakdown were all in the expansion zone.
Otago Southland's stocks of finished products had a 65.6 reading, deliveries of raw materials sat at 62.5, employment was at 56.3 and production levels and new orders were on 53.1.
Nationally, the seasonally adjusted index rose 1.6 points from April to hit 58.5, the highest value since January 2016.
BusinessNZ's executive director for manufacturing Catherine Beard said that, overall, the sector had remained in expansion in all months since October 2012.
''The [1.6-point] lift in expansion for May more than eclipsed the dip for the previous month,'' she said.
Mrs Nicholls said food and beverage manufacturers were busy with seasonal production while dairy manufacturing was also ''progressing well''.
''May was a busy month across a variety of manufacturers, and it was pleasing to see the bounce-back from last month,'' she said.
Manufacturers associated with the construction industry, which included wood, machinery and equipment manufacturers, had good sales, while aluminum boat manufacturers continued to ''thrive'', with strong export sales and consistent domestic sales across the New Zealand market place.
Mrs Nicholls said manufacturers supplying the tourist market had reported slower sales during May, which was not unexpected given it was the shoulder season.
BNZ senior economist Doug Steel said the national index had now pushed up to its highest level in the past 16 months, which meant the ''mild slowdown'' seen at the beginning of the year was a ''distant memory''.
