But the relative improvement is not being seen as sign of any immediate relief for the sector, as signs of strain appear in global emerging markets.
The Bank of New Zealand -- Business NZ survey published on Thursday put the seasonally adjusted performance of manufacturing index (PMI) at 48.8 in July from 45.3 the month before. Anything below 50 indicates activity is contracting.
Bank of New Zealand senior markets economist Craig Ebert said that as part of the "rebalancing story" factors were now riding to the rescue of the manufacturing sector.
But many more existing and emerging issues weighed against any immediate relief, he said.
Among the promises of relief were the affirmation of an easing cycle in interest rates and the declining exchange rate.
A sharp correction in most commodity prices recently might also help relieve the raw material cost pressures that were adding to the distress of manufacturing profitability, Ebert said.
At the same time, the construction sector was tracking weakly in this country and in key overseas markets, while local business investment was looking "a bit shaky".
"As disconcerting as this is, we also note the clearer loss of momentum that's appearing in the global economy."
Arguably most significant was that many emerging market economies were now losing their lustre, curtailing a key source of growth that had been relied on to keep the world economy afloat, he said.
The recent correction in oil prices, and commodity prices in general, was a warning of a bona fide loss of steam in global demand.
"This is something always important for New Zealand to watch for, especially the manufacturing sector."
