The highest level since June 2004, led by new orders and production, stoking optimism the economy may be picking up pace.

Production slips as dry climate squeeze bites.

The strongest growth is in Canterbury/Westland, probably reflecting demand for building materials, but employment in the sector is shrinking.

A pick-up is expected next year when Canterbury's reconstruction effort gathers pace.

Rally ends a horror run of data that had analysts increasing expectations for an interest rate cut next month.