The PMI rose three points in January, to a seasonally adjusted 50.8 - anything above 50 indicates the sector is in expansion. Photo: 123RF
The manufacturing sector has crept back in to expansion after three straight months of contraction to end last year.
The BNZ-Business New Zealand Performance of Manufacturing Index (PMI), rose three points in January, to a seasonally adjusted 50.8.
A PMI reading above 50 indicated the sector was in expansion.
However, the reading was well below the long-term average of 53.
Production was at its highest level since August, but new orders contracted for the fifth consecutive month.
Employment was back in expansion after three consecutive months of contraction, while finished stocks also returned to positivity.
BNZ senior economist Craig Ebert, said the country's manufacturing sector "appears to have reclaimed a sense of stability".
But he said it was too early for optimism given the weak demand, highlighted by ongoing contraction in new orders.
"That's one of the reasons ... we still remain a bit cautious. So yes production is increasing and employment even managed to get above the break-even mark in the month," Ebert said.
"New orders, they did improve but they still didn't get back to even stability. There's a sense of caution that the order books are still a little bit weak."
That was not a good indicator for near term production, Ebert said.
New Zealand's PMI was largely in line with the global PMI, which was just in contraction but improving on the rebound in China.