The upbeat data released Wednesday contrasted with a slew of less positive signals for March and April that suggest the pace of growth will likely slow in the second quarter.
"Looking ahead, a range of indicators point to a slowdown," Marcel Thieliant of Capital Economics said in a commentary. He pointed to a slowdown in industrial production and weakening sentiment among manufacturers as reasons for his forecast for near-zero growth in 2015.
Economists had mostly forecast growth for the first quarter at about 1.5 per cent.
The 0.6 per cent rise in GDP from the previous quarter was the second straight quarter of growth following a recession in mid-2014 brought on by a sales tax hike that crippled private demand.
Public investment plunged 5.5 per cent, though real incomes rose 0.6 per cent, helping to underpin demand
The news pushed share prices higher, lifting the Nikkei 225 index by 0.7 per cent to 20,164.60. The index recently breached the 20,000 level for the first time in 15 years, buoyed by strong corporate profits as well as pension funds and other institutional investors rotating cash into shares from other asset classes.
The data reduce the likelihood the Bank of Japan will opt to expand its lavish monetary stimulus at a policy meeting later this week.
Economists are divided over whether the recovery is finally on track after years of tepid growth and lingering setbacks from the global financial crisis.
The increase in private sector inventories in the last quarter provided a 0.5 per cent boost to the GDP in annual terms. It reflects an unwelcome increase in unsold goods due to last year's recession and persistent weakness in household and corporate demand.
More than two years after Prime Minister Shinzo Abe launched his program heavy of monetary stimulus, the government and central bank have yet to see much progress toward their 2 per cent goal for inflation. Wage increases have been scant and corporations have held back on investing at home, wary of slow growth in a shrinking domestic market as the population ages and shrinks.
Still, housing investment revived early this year, growing 7.5 per cent in the January-March quarter from the year before as changes in regulations encouraged demolition of older, unoccupied homes.
In Tokyo's suburbs, many such homes are being cleared and redeveloped. Unlike the U.S. and other major economies, Japan's housing market is skewed toward construction of new homes, and much of the aging, postwar housing stock is decrepit and due to be replaced or demolished.
Spending on housing and related items is a crucial driver for growth in Japan and the government is expanding its housing loan program and encouraging spending by providing subsidies for renovations to improve energy efficiency and earthquake resistance.
Nearly 14 per cent of houses in Japan stand vacant, abandoned by elderly occupants and left standing due to rules that charge six times the tax on vacant land as on land that is occupied. Recent reforms have enabled local authorities to inspect vacant houses and designate some as exempt from such tax advantages.
"Since the Vacant Houses Act was enacted some owners are beginning to take action. Many companies, real estate and securities companies are getting involved," said Hidetaka Yoneyama, a researcher at the Fujitsu Research Institute's Economic Research Center.Suggest a correction