Stronger than expected GDP data for the first three months of 2021 shows New Zealand avoided a second pandemic recession.

Gross domestic product (GDP) rose by 1.6 per cent in the March 2021 quarter, following a 1 per cent fall in the December 2020 quarter, Stats NZ said today.

The New Zealand dollar rose on the news - up 0.4 per cent.

"After an easing of economic activity in the December quarter, we've seen broad-based growth in the first quarter of 2021.

"This is despite Auckland being in alert level 3 lockdown for 10 days, and continued border restrictions," national accounts senior manager Paul Pascoe said.

The first quarter of this year was expected to be a tough one for the economy.

It includes the traditional peak season for international tourism and the time that international students arrive. Neither of which happened this year.

Based on that, the RBNZ still had a 0.6 per cent fall in GDP pencilled in for the quarter in its Monetary Policy Statement in May.

But market economists were more optimistic with ANZ picking a rise of 0.5 per cent, Westpac 0.6 per cent and both ASB and BNZ a rise of 0.8 per cent.

Average annual GDP declined 2.3 per cent through the year to March 2021.

The services industries, which represent about two thirds of New Zealand's economy, made the largest contribution to the result.

"Households spent more on accommodation, eating out, and purchasing big ticket items such as furniture, audio visual equipment, and motor vehicles. This helped support the growth in retail trade and accommodation industry and wholesale trade industry," Pascoe said.

Construction rebounded 6.6 per cent after a fall of 8.4 percent in the December 2020 quarter.

Construction services, heavy and civil engineering construction, and residential building construction all contributed strongly.

The construction industry has returned to near record levels of activity with historically high volumes of residential building work contributing to overall activity.