Although the war itself did more than any other event to stimulate manufacturing in New Zealand, the economic circumstances and the trend of events from 1935 to 1939 had raised its importance. The number of factories grew from 5,270 in 1934–35 to 6,146 in 1938–39; factory employment rose from 79,358 to 102,365 in the same years; and the value of output rose from £79,000,000 to £114,000,000. This was the basis for the further development during the war.

The changing circumstances resulting from the war forced New Zealand to aim at maximum practicable self-sufficiency in manufactured goods. But the expanded industrial activity had to be related to the existing type of economy, to the raw materials and capital equipment reasonably available, and to the skills already developed. The following list of goods produced in New Zealand for the armed forces during the war shows the relationship between war and peacetime economy, though the items listed show the rudimentary state of manufacture.

Twelve million yards of serge, woollen, and flannel cloths; thousands of blankets, jerseys, and cardigans; underclothing, hosiery, uniforms, shirts, and footwear; 1 million battledress suits; 1 million or more field-service caps; nearly 300 million rounds of ammunition; trench mortars and bombs; H.E. bombs and fuses; aircraft practice bombs; fuses; grenades; antitank mines; chemical land mines; sten guns; automatic rifles; radios and equipment; earthmoving equipment; hospital beds; field and canteen equipment – water bottles, helmets, and shovels, etc.; boilers, tools, electrical accessories, fire extinguishers; jacks, pumps, lubricators, concrete mixers; about 300 vessels – mine sweepers, 1,000-ton steel barges, 45-ft wooden tugs.

Moreover, unemployment had disappeared, more married women were working, overtime was general, and incomes were high. This, with the shortage of imported consumer goods, led to a heavy demand for New Zealand made civilian goods, on top of the defence production. And though industry benefited, the war brought its own disadvantages: shortage of raw materials, difficulty in hiring enough skilled workers, the need to postpone replacement (or even major repairs) of much of the machinery and equipment and buildings used in manufacturing, and the effect of wartime fiscal policy. Nevertheless, the benefits outweighed the disadvantages. Assured of a large part of the market, some manufacturing industries were able to expand without having first to struggle through a difficult period of competition from established overseas producers. During the six years, 1938–39 to 1945–46, manufacturing output grew by almost one-third, the value of production rising by £81,000,000, from £114,000,000 to £195,000,000. Metals, machinery, apparel, and footwear made the greatest gains and increased their share of total manufacturing production. Except for footwear, these industries processed imported materials, so that the trend of development noted earlier was continued.