Capital expenditure rose 5.8 percent in the second quarter, seasonally adjusted, the Australian Bureau of Statistics said on Thursday. That compared with expectations for a rise of 4.0 percent and reversed a fall of 3.4 percent in the first quarter.
It was the strongest rise in spending since the December quarter 2002.
The estimate for investment in the year to June 30, 2005 was revised up to A$49.16 billion ($34.87 billion), 9 percent higher than the A$45.09 billion estimate originally given in May.
The data provides early clues to second-quarter gross domestic product (GDP) figures, to be published on Wednesday.
"It bolsters the outlook for the economy over the next year and represents quite a substantial improvement in firms' investment outlook," said Brian Redican, senior economist at Macquarie Bank.
The 2004/05 spending estimate was still down on the A$51.24 billion spent in the previous 12 months.
Company spending was scaled back after Australian interest rates rose in both November and December. The Reserve Bank, which holds its next rate-setting meeting on September 7, has since left rates at 5.25 percent as demand for housing and credit also slowed.
The Australian dollar firmed to $0.7051/56 after the data, from $0.7039/44 just prior.
Interest-rate futures softened, with December bills implying a quarter-point tightening of the 5.25 percent cash rate this year.