Manufacturing activity in Otago and Southland showed a welcome improvement in September after what had proved to be a tough winter.
The national BNZ Capital-Business New Zealand performance in manufacturing index rose 2.9 points from August to reach 51.7 - the first overall level of expansion in the sector since April 2008.
The September result was also the highest value since February 2008 and the highest September result since 2007.
Importantly for the South, the Otago-Southland region led the recovery with 58.7 points, a significantly improved result from the previous eight months.
Canterbury-Westland was the next highest at 53.3, followed by Northern with 52.8 and Central on 50.7.
A reading of more than 50 indicates activity is expanding and below 50 that it is contracting.
Otago-Southland Employers Association chief executive John Scandrett greeted the news with cautious optimism.
Continuing exchange-rate issues and fluctuations plagued many export-oriented operations.
The value of the dollar against the currencies of New Zealand's main trading partners might serve to stifle positive future trends, he said.
What was encouraging in the latest figures was that indices following new orders, production, employment and deliveries of raw materials all expanded from previous readings.
Also of significance was the Otago-Southland figures being based on a wider than usual number of respondents.
BNZ Capital economist Mark Walton warned against making generalisations about the effect of currency movements.
"Not all our exporters are paid in US dollars, after all. The trade-weighted index, by virtue of being an averaged exchange rate, masks the fact that exchange rates have actually moved in some exporters' favour, especially when one considers import prices are falling."
The clearest example was of those who sent goods across the Tasman, he said.
Australia was New Zealand's single biggest export market, accounting for about 22% by value of total merchandise exports.
For non-food manufactured goods, the proportion was higher.
The importance of Australia as an export market was growing, despite the significant progress New Zealand had made into the emerging markets of Asia.
As such, it was the New Zealand dollar-Australian dollar cross that remained of prime importance to New Zealand exporters, particularly manufacturers, Mr Walton said.
While the cross had edged up over the course of the year, the New Zealand dollar had traded broadly within a A78c to A82c range, well below the A85c average of the past decade.
"In general, recent currency moves have been great news for manufacturers. Intermediate inputs are generally imported in US dollars and final sales are dominated by Australian dollar receipts."
With the New Zealand dollar appreciating strongly and the cross with the Australian currency remaining stable, manufacturers were becoming more optimistic about their prospects, he said.
Even for those who did export in US dollars or British pounds, and for whom things were not looking so good, they should not generalise.
Wine, fishing, leather and pelt producers seemed to be among the worst hit of those exporters, Mr Walton said.
However, these were affected by industry-specific issues, as well as the currency.
Wine was suffering from overproduction, fishing from catch constraints and leather and pelt producers were facing fallout from diminished sales of top-end cars and fashion products.
Dairy farmers and processors were benefiting from rising commodity prices which had more than offset the currency impact and translated into a higher forecast dairy payout, he said.
With herds being reduced in the US, price gains look sustainable.
Similarly, firm offshore sheep meat prices had helped counter the gains of the NZ dollar against the pound.
"We're of the view that the situation faced by our manufacturers, many of whom sell into a robust Australian economy in an environment of favourable exchange rate movements, is a good deal better than many folk appreciate."
