The survey can be found at http://www.dallasfed.org .
The production index increased to 27.2 in March, compared with 18.1 in February.
Indicators for capacity utilization, volume of shipments, average employee work week and capital expenditures also strengthened.
All indexes remained positive; however, indexes for volume of orders, growth of orders and general business sentiment recorded slightly lower levels in March than February.
Sentiment on general business activity was 12.7 in March compared with 26 in February.
"For perspective, it's important to note that the general business activity index dipped into negative territory during fourth quarter 2006 and rebounded to 4.7 in January," said Dallas Fed economist Fiona Sigalla.
"Additionally, while there is some cooling in the volume of new orders and level of general business activity, there continue to be indicators of strength in production, capacity utilization and volume of shipments."
The Dallas Fed conducts the survey monthly to obtain a timely assessment of the state's factory activity. More than 120 businesses responded to the March survey.
Texas produces more than 8 percent of the total manufactured goods in the United States. Texas ranks second behind California in factory production and first as an exporter of manufactured products.
For additional perspective on the Texas Manufacturing Outlook Survey, visit http://dallasfed.org/research/swe/2007/swe0701g.cfm .