"Strong population growth, improving labour market conditions and low interest rates are fuelling retailing spending growth, residential construction and housing market activity."
Some of the partial data released over the past few weeks had come in slightly weaker than expected, such as weak core manufacturing production and flat wholesale trade, he said.
"The underwhelming performance in these partial data releases was a little surprising, given these industries should receive a boost from strong activity in construction and retail demand. Nonetheless, New Zealand economic data can be a bit choppy quarter-to-quarter, and we continue to remain encouraged by business confidence surveys which point to a broadening in economic activity."
ASB expects dairy's contribution to growth to be relatively modest following strong growth in September reflecting good growing conditions.
"However, we expect dairy production to drop quite sharply over the first half of this year in response to low dairy prices and dry weather conditions. This sharp drop is likely to take 0.8 percentage points off GDP over the first half of 2015."
Reserve Bank governor Graeme Wheeler said on Thursday that expected drought impacts had cut the bank's forecast for GDP this year by about 0.5 per cent.
It forecasts 0.8 per cent for the December 2014 quarter and expects the economy to maintain that sort of clip over the next two years.
Westpac economist Michael Gordon, whose pick is 0.7 per cent for the December quarter, said the expected slowdown in the pace of growth compared to September was not as substantial as it might seem, as there were some elements of the previous quarter that looked overdone or were unlikely to be repeated.
An example is the September quarter's 8 per cent jump in mining sector output, which was attributed to a burst of exploration activity. "This is lumpy by nature, and we've assumed that it came to an end by the December quarter," he said.
"The retail sector reported the strongest growth over the December quarter. As reported last month, total retail spending rose by 1.7 per cent with especially strong growth in the hospitality sub-sector."
He also expects a strong pickup in forestry production, recovering about half of the 8 per cent decline seen over the previous year. "Weaker demand from China saw log prices fall sharply in early 2014, which discouraged harvesting. Since then, a weaker NZ dollar and falling transport costs have seen prices improve in domestic terms."
Gordon also pointed to a rebound in house sales, which will have boosted financial services.
