Latest figures show manufacturing activity shrank at its slowest pace since April 2008.
The BNZ Capital-Business New Zealand Performance of Manufacturing Index increased 3.2 points to 49.7 in July.
If the reading ticks above 50 it indicates manufacturing activity is expanding.
Senior BNZ Capital economist Craig Ebert says for the last few months there has been a sense of a recovery underway.
He says around the world, order books are filling up again and the global manufacturing index has now hit the magical 50 mark.