Growth was heavily concentrated in the construction sector, whose 12.5 per cent increase (the strongest for 14 years) accounted for two-thirds of the rise in quarterly GDP.
The services sectors, which comprise 70 per cent of GDP, grew just 0.3 per cent in the quarter and despite the construction boom manufacturing output was flat.
The expenditure measure of GDP grew 1.3 per cent in the quarter, driven by net exports and by a 2.1 per cent increase in investment in fixed assets.
Within the latter, residential building investment was up 11.6 per cent, the largest quarterly rise since September 2002, and non-residential building investment was up a record 17.5 per cent.
Investment in plant machinery and equipment, however, fell 8.6 per cent, albeit from record levels in the December quarter.
ANZ economist Mark Smith expects business investment to bounce back given the high levels of investment intentions found by business confidence surveys and increasing pressures on existing capacity.
Household consumption was flat, for the first time in five years, as declining consumption of services offset increased spending on goods.
Bank of New Zealand economist Craig Ebert discounts the flat household consumption result, however, pointing to high levels of surveyed consumer confidence and to the increases in employment and net immigration already reported for the March quarter.
Deutsche Bank chief economist Darren Gibbs said the Reserve Bank would see yesterday's data as readily justifying a fourth consecutive rise in the official cash rate on July 24.
But he expects it then to pause, allowing time for evidence to accumulate on the early impact of its initial tightening of monetary policy.
"At this point beyond July 24 we see scope for one further rate hike this year, most likely on December 11."
Smith said that although the pace of quarterly growth was likely to ease from here it would remain above trend over the rest of the year.
"All else equal, the economy looks likely to keep up the good work, with net migration and a strengthening labour market coming into play," he said.
"The positives are outweighing the negatives of a very high New Zealand dollar and tight fiscal position."
However, if consumers decided to embark on a borrow-and-spend free-for-all the official cash rate would go much higher, Smith said.
"The New Zealand economy does not have the capacity to accommodate a construction boom and a consumption boom at the same time."
