By André Averion, Communications Chair

Published March 8, 2025.

In February 2025, Texas manufacturing activity experienced a notable decline, as reported by the Federal Reserve Bank of Dallas. The general business activity index dropped to -8.3 from January's 14.1, marking a significant downturn.

The production index, a key measure of state manufacturing conditions, fell 21 points to -9.1, indicating a contraction in output. Similarly, the new orders index decreased by 11 points to -3.5, reflecting a decline in demand. Labor market indicators revealed stagnant employment levels and reduced workweeks, suggesting that manufacturers are adjusting to decreased activity by limiting labor hours.

This downturn is largely attributed to escalating concerns over impending tariffs and shifts in immigration policy under President Trump's administration. Texas stands to lose $47.1 billion—the most of any state—if tariffs on goods from Canada, Mexico, and China are implemented. The uncertainty surrounding these policies has led to a cautious approach among manufacturers, with some considering workforce reductions and shortened workweeks.

Automotive industry leaders, such as General Motors, have expressed concerns about the potential long-term impact of these tariffs. Executives have indicated that if the tariffs become permanent, relocating plants may become a necessity to mitigate financial losses. 

The Dallas Fed's survey, conducted from February 11 to 19, also highlighted a growing reliance on out-of-state and international workers among Texas firms. Approximately 32% of companies reported hiring employees from other states, while about 25% recruited internationally in the past year. This trend underscores the potential challenges that changes in immigration policy could pose to the state's labor market. 

Input cost pressures intensified in February, with manufacturers facing higher prices for raw materials and components. Despite this, wage pressures slightly retreated, suggesting that while operational costs are rising, companies are hesitant to increase wages amid the current economic uncertainty.

The broader economic implications of these developments are evident in consumer sentiment, which has declined from January to February. This decline reflects growing concerns about the potential impact of tariffs and immigration policies on the state's economy. citeturn0news18

In the financial markets, the U.S. dollar remained relatively stable despite the negative manufacturing data. The U.S. Dollar Index, which measures the currency against a basket of others, stayed flat as traders processed the Dallas Fed's report. Currency pairs such as EUR/USD and GBP/USD saw minor fluctuations, but overall, the dollar's position remained unchanged.

Looking ahead, expectations for manufacturing activity six months from now have tempered. The future production index fell to 28.3 from 44.8, and the future general business activity index dropped to 7.7 from 35.5. While these figures remain positive, they indicate a more cautious outlook among manufacturers compared to the previous month.

The convergence of these factors—declining manufacturing activity, policy-induced uncertainties, and shifts in labor dynamics—paints a complex picture for Texas's economic future. As businesses navigate this challenging landscape, the interplay between federal policies and state-level economic health remains a critical area of focus.

For the Filipino American community in the Dallas-Fort Worth (DFW) area, these developments carry significant implications. Many Filipino Americans are employed in sectors such as healthcare, technology, and manufacturing. The reported decline in manufacturing activity and potential workforce reductions could impact job security for those in related fields.

Additionally, the emphasis on hiring out-of-state and international workers by Texas firms highlights the importance of immigration policies to the Filipino American community. Changes in these policies could affect employment opportunities and family dynamics for many in the DFW area.

Business owners within the community, especially those involved in import-export or reliant on global supply chains, may face challenges due to the proposed tariffs. Increased costs of imported goods could affect profitability and operational sustainability.

As the situation evolves, staying informed and engaged with local economic developments and policy changes will be crucial for the Filipino American community in DFW to navigate the potential challenges ahead.