Much of the growth was concentrated in agriculture and its downstream processing, reflecting a bumper growing season which has come and gone.
Agricultural output jumped 2.3 per cent in the quarter to its highest level since December 2006.
The food processing sector's output jumped 3.2 per cent, driving a 1.9 per cent increase in manufacturing overall.
But volumes are one thing, prices another. In the same quarter export prices for dairy products and meat fell 4.8 and 5.4 per cent respectively in New Zealand dollar terms, according to ANZ's commodity price index.
Other parts of the primary sector were more mixed. Forestry activity fell 1.4 per cent and while mining activity rose 3.4 per cent, reflecting increased exploration activity, it was still down on the March quarter last year.
Construction activity was flat and remains 25 per cent below its peak in December 2007. Service industries, which represent 69 per cent of economic activity, grew 0.4 per cent in the quarter, compared with an average 0.7 per cent in the previous four quarters.
While output spiked, the demand side of the ledger was much more subdued.
The expenditure measure of GDP grew 0.8 per cent in the quarter, boosted by a large buildup of inventories, but just 1 per cent on an annual average basis.
Household consumption was flat, and residential investment down 0.6 per cent.
Auguring well for potential growth, business investment rose 2.1 per cent, including a 5.2 per cent increase in spending on plant, machinery and equipment.
But net exports were a drag on growth; exports fell 1.7 per cent while imports rose 4.1 per cent.
The buildup in inventories was largely driven by stocks of dairy products.
"While dairy inventories will eventually be sold, the higher volume on offer could put downward pressure on prices and dairy incomes," said ANZ economists Sharon Zollner and Mark Smith.
While gross domestic product provided a positive surprise, national income grew much more modestly. The difference between the two measures is that a substantial slice of what the country produces is required to provide a return to foreign suppliers of capital and credit.
In addition, changes in export and import prices can boost or erode national income.
Real gross national disposable income, which adjusts for those factors, rose just 0.1 per cent in the March quarter to be 0.7 per cent higher than a year earlier. Per capita the annual rise was just 0.1 per cent. The ANZ economists pointed to a widening of the gap, evident since the middle of the last decade, between the economy's income-generating (tradables) and spending (non-tradables) sides.
While primary production and the associated manufacturing activity rose, exports of services fell after Rugby World Cup visitors left, so tradable sector activity grew a modest 0.3 per cent in the quarter, compared with 1.4 per cent in the non-tradables sector.
"The gap ... is growing wider and is moving in the opposite direction of structural imperatives to rebalance the economy. Given the current mix of monetary conditions [a high dollar and low interest rates], the fickle global scene and the need to rebuild Canterbury, this gap is likely to widen further," they said.
The Reserve Bank had forecast GDP growth of just 0.4 per cent in the March quarter.
It has also revised down its view of how fast the supply capacity of the economy is growing.
