03:43 PM EDT, 08/25/2025 (MT Newswires) -- The Texas manufacturing sector swung back into the contraction territory in August, even as new orders turned positive for the first time since January, data from the Federal Reserve Bank of Dallas showed Monday.

The general business activity index fell to minus 1.8 this month from 0.9 in July, which followed a five-month contraction. The consensus was for a minus 1.7 reading for August in a survey compiled by Bloomberg.

New orders improved to 5.8 from minus 3.6, while the shipments index jumped to 14.2 from 2.7.

"A particular bright spot this month was that demand improved for the first time since January, with the new orders index turning positive," said Emily Kerr, senior business economist at the Dallas Fed.

Production, which the Fed branch calls a key measure of state manufacturing conditions, fell six points month over month to 15.3. The data showed upward pressures on raw material costs and selling prices.

Nearly half of Texas firms surveyed from Aug. 12 to Aug. 20 reported a negative impact from higher tariffs, with the effect most pronounced in manufacturing, the Fed branch said. About half of firms reported increased input costs due to tariffs, while 27% reported increased selling prices, it said.

Six months out, expectations for general business activity rose to 24.8 in August from last month's 19, while the future production index climbed to 40.4 from 30.3, according to the Fed branch's report.