Texas business activity expanded for September, according to a Dallas Federal Reserve Texas Manufacturing Outlook Survey released today. 

After clocking in at 5.0 for August, this month's report puts business activity up almost 8 points to 12.8, the highest reading in a year and a half. Analysts were pleasantly surprised by the report, having expected only a slight improvement to 6.0. 

The monthly survey asks about 100 Texas manufacturers to rate their views on current and future business activity. Market watchers keep a close eye on this index, as Texas' manufacturing can serve as an important indicator of national economic health. A positive number indicates month-over-month growth, while a negative number means contraction. 

In a sign of stable expansion, the Dallas Fed's production index also rose, from 7.3 in August to 11.5 for September. Besides a shallow one-month dip into contraction earlier this year, production has been positive since 2011.

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Source: Dallasfed.org. 

Taking a closer look at the index's components, new orders stayed relatively steady at 5.0. Growth rate of orders inched closer to contraction from 2.2 to 0.9, but unfilled orders expanded from 0.5 to 1.1 Looking ahead, perceptions of general business conditions in six months' time remain positive, with especially strong gains for employment expectations. 

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