A private manufacturing index has risen, leaving the sector close to what would be its first expansion in more than half a year.

The Australian Industry Group’s Performance of Manufacturing Index rose by 4.4 points to 49.2 – just below the 50-point level that separates expansion from contraction.

It was the seventh consecutive month of contraction in the sector, but this month’s reading shows that it is very close to getting back into growth.

The survey’s authors say the budget resulted in a dampening in confidence, but production and new orders rose to 51.6 and 55.1 points respectively.

However, manufacturing employment, supplier deliveries, inventories and exports all contracted last month.

The Ai Group’s chief executive Innes Willox says there are still plenty of headwinds affecting the sector.

“The manufacturing sector continues to be buffeted by weak household demand, a lack of business confidence and fierce competition in both domestic and export markets heightened by the renewed strength in the Australian dollar,” he said in a statement.

“While there was an encouraging rebound in new orders after a particularly weak April, the public reaction to the Federal Budget appears to be weighing negatively on consumer sentiment and business confidence.”