While having led the four regions at times during recent months, Otago-Southland has declined while nationally the BNZ-BusinessNZ Performance manufacturing index for May was up 0.5 points to 57.1, its highest level of expansion since January.
Leading the index was the upper North Island on 63.1, lower North Island on 56.6, Canterbury Westland on 56.6 and Otago-Southland trailing on 45.2.
In April, Otago-Southland was on 53.8 points, but yesterday's slip to 45.2 was the first contraction to below 50 for several months.
Scores above 50 denote expansion, and below, contraction.
Otago Southland Employers' Association chief executive Virginia Nicholls said the regional index for May had slipped under the expansionary/contraction threshold, after "quite a significant period of steady-as-she-goes performance''.
"For the moment, depressed elements in parts of the agricultural sector appear to be driving lower-level manufacturing activity,'' Mrs Nicholls said.
Last week in separate Statistics New Zealand data, meat and dairy products led the fall in total manufacturing sales across the country for the March quarter.
The figures showed the volume of total sales fell 1.2%, with meat and dairy product manufacturing volumes down 7.8%.
BusinessNZ's executive director for manufacturing Catherine Beard said the sector had been in expansion in almost all months since October 2012.
Key components continuing to show strong results were production at 61.1, having lifted above the 60-point mark for the first time since December 2014, and new orders at 59.9, which remained within a tight band range of 2.5 points since November 2015.
"In addition, the proportion of positive comments rose to 66.4%, with a number of positive comments pointing to business as usual and a steady flow of activity/orders,'' Mrs Beard said.
Mrs Nicholls said negativity was seen across machinery and wood and paper sub-sectors, but on the flip side, manufacturers with an export-oriented arm were continuing to do well.
"The positive comments in May have flowed through from metal products and marine,'' she said.
She added a caution for next month's data, saying that while the May sub-indices for finished stocks were tracking "relatively positively'', production and deliveries were sitting at the low end of the range.
