New Zealand's manufacturing sector continued to expand in March, but momentum eased as sentiment weakened, with firms increasingly citing global uncertainty including the war in Iran as a growing headwind, BusinessNZ said on Friday.

The BusinessNZ Performance of Manufacturing Index (PMI) for March edged down to 53.2 on a seasonally adjusted basis from February's 54.8, remaining well above the long-term average of 52.5 and signaling continued expansion in the manufacturing sector.

"It is gratifying to see that the manufacturing sector is still expanding but, at the same time, it is concerning to note that the proportion of businesses commenting negatively about their situation increased to 62%, from 44.5% in February," said Catherine Beard, BNZ's director of advocacy.

Among the sub-indices, production fell to 53.8 from 56.3, finished stocks rose to 54 from 51.3, employment increased to 51.4 from 50.3, deliveries edged down to 50 from 50.7, and new orders fell to 55.8 from 57.2.

"The PMI result supports our view that economic growth was reasonable in the first quarter of the year, even though material headwinds had accumulated by quarter's end," said Doug Steel, BNZ's senior economist.