NEW YORK ( TheStreet) -- Business activity in the Philadelphia region posted a surprise jump in September, tapping its highest level since April.

The Philadelphia Federal Reserve Bank's business index surged to 8.7 in October after posting a reading of -17.5 in the prior month. The latest reading was significantly better than an anticipated reading of -9.8.

The recent reading was the first positive read since July. As Dan Greenhaus, economist at BTIG, writes in a research note, this "marks a very, very sharp snapback from the -31 reading in August." The plunge in August had spooked investors, sending the S&P 500 down 4.5% when the report was released on Aug. 18, he notes.

The rebound in Philadelphia reading is now more in line with the national read on business activity, which suggest that the economy is working its way through a soft patch but that a recession is unlikely.

"The index's reversal should for now mark the end of the recession debate while the increase in the outlook component suggests that businesses are getting a bit more optimistic about the immediate future," writes Greenhaus. However, he says "it should be noted that during the last recession, this measure did not move into negative territory until October 2008, well after the recession moved into its most acute phase."

Greenhaus explains that the boost came from a sharp increase in shipments and a snap back of new orders into positive territory, marking the highest level that the new orders index has reached since April. He added that while the number of employees declined in the month, the length of the average workweek moved solidly into positive territory.

Also from this morning, The Conference Board's September leading indicators index ticked up 0.2%, about in line with expectations, after growth of 0.3% in August.

"The leading economic indicator is pointing to soft economic conditions through the end of 2011," says Ken Goldstein, economist with The Conference Board in Thursday's release. "There is a risk that already low confidence - consumer, business and investor - could weaken further, putting downward pressure on demand and tipping the economy into recession. The probability of a downturn starting over the next few months remains at about 50 percent."

The Conference Board's index, which pools ten economic figures has been trending upward in the four prior months. However, a rise in the index in August may have actually indicated a worse economic outlook. As investors turned away from stocks to seek safer ground in cash and deposits, a jump in money supply gave a boost to the leading indicators index in August.

The number of existing home sales declined 3% in September to a seasonally adjusted annual rate of 4.91 million in September from an revised 5.06 million in August,, according to the National Association of Realtors. The forecast called for a 2% decline to 4.93 million, from 5.03 million previously.

-- Written by Chao Deng in New York.

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