Data from Treasury showed business investment increased by 6.4 per cent in the 2022/23 financial year, higher than the estimated three per cent growth laid out for the same year in the last federal budget.
The growth was driven by a boost in new machinery and equipment investment after an easing of supply chain setbacks, despite tightening financial conditions and slower domestic activity.
Companies investing in items such as motor vehicles also led to new business investment rising by 2.1 per cent in the June quarter this year.
Treasurer Jim Chalmers said the new growth figures were encouraging.
"Weak business investment hurts our economy, so we are pleased to see it turning around on our watch," he said.
"While higher interest rates will likely weigh on business investment and growth in the period ahead, and many Australians are doing it tough, we're one of the best-placed economies to navigate these challenges."
Treasury forecasts have shown new business investment is set to slow to 2.5 per cent in 2023/24, before reaching two per cent in 2024/25, with the slowdown following tighter economic conditions under higher interest rates.
Non-mining investment is set to be the driver of new business growth in upcoming financial years, driven by a pipeline of construction projects.
New investments in non-mining industries grew by 8.3 per cent in the 2022/23 financial year, while mining sector investment was at two per cent.
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