New Zealand's manufacturing sector bounced back into expansion last month, according to the latest performance of manufacturing index (PMI) release on Friday.

The BNZ-Business New Zealand PMI for May was 55.7, up 7.5 points from April, on a scale where above 50 indicates expansion and below 50 contraction.

The reading showed the highest level of activity since February and brought the PMI average for the first five months to 53.3, compared with 52.5 for the same period last year.

Business New Zealand's executive director for manufacturing Catherine Beard said the improvement in activity was built on some crucial upswings from the previous month.

"The key sub-indices of production and new orders showed a significant upswing from April, while the Northern and Canterbury/ Westland regions went from decline to expansion in activity," said Beard in a statement.

"Comments from manufacturers were also more positive, with Australia remaining a sizable focus for export opportunities," she said.

"Interestingly, a number of manufacturers could not identify a main positive influence. Instead, it was an overall steady increase in activity from various facets of their business. With four of the last five months in expansion, 2012 is continuing on a better growth path than seen in recent years."

BNZ economist Doug Steel said in the statement that the future posed some "obvious risks from the European situation," but recent trends in the PMI suggested the manufacturing sector has made decent positive contributions to overall GDP growth in the first two quarters of the year.

All five of the main sub-indices showed expansion in May, with production on 58.8, new orders on 57.3, employment on 52.2, deliveries on 52.7 and finished stocks on 50.5.