TOKYO--Japan's economy regained momentum in the first quarter of this year, despite sluggish growth in the global economy, as domestic demand fired on all cylinders before a major consumption tax rise and employment improved.

Gross domestic product grew at a seasonally adjusted annual rate of 5.9% in the first quarter, the Cabinet Office said Thursday.

That marked a rebound in growth, which slowed sharply toward the end of last year. It was also evidence that consumers have retained generally positive views about their economic situation 17 months after Prime Minister Shinzo Abe came to power.

A rush in purchasing ahead of the April 1 sales tax increase to tackle the nation's fiscal woes--the first major tax raise in 17 years--fueled the growth of personal consumption expenditures. That in turn prompted businesses to increase production and capital spending, creating jobs and increasing overtime pay.

"Rush purchases pushed up GDP in the first quarter as expected," said Economy Minister Akira Amari at a news conference after the data came out. "Consumption expenditures were particularly strong for durable items."

Private consumption, up an annualized 8.5%, was so strong it helped the economy shrug off the effects of stalling growth in the U.S., Japan's No. 1 export destination, during the quarter.

But the front-loading of personal consumption in the first quarter has prepared the ground for a pullback in the second. Retail sales for April and early May have already showed a slowdown in personal consumption, especially in consumer durables such as autos, refrigerators and TVs. Yet some retailers say the declines weren't as bad as expected.

In an attempt to mitigate the effects of such pullbacks, Mr. Abe's government has called for the rapid implementation of a fiscal spending program this spring, hoping to limit any second-quarter decline.

Mr. Abe has tried to jolt the Japanese economy out of decades of deflation and economic stagnation with decisive monetary easing and fiscal spending. But he hasn't proved as decisive on structural reforms, the "third arrow" of his "Abenomics" reform plan, disappointing investors and contributing to a decline in Japanese share prices this year.

The challenges facing Mr. Abe are evident from recent GDP data. With prices rising faster than wages thanks to the Bank of Japan's successful campaign to stoke inflation, employee income is stagnating in real terms, down 0.7% on year in the quarter, according to GDP data. Once the effect of the three-percentage-point sales tax rise to 8% in April is taken into account, real employee income is likely to be even smaller in the second quarter, posing serious risks to personal spending growth, experts say.

Uncertainty about global demand is also casting a pall. A slowdown in China is expected to damp economic growth for Asia as a whole, the region Japan depends on for half of its exports. The BOJ and the International Monetary Fund predict that a recovery in the U.S. and Europe will offset weaknesses in Asia. But recent data out of the U.S. indicate the recovery may not be strong enough to offset all the headwinds.

"A strong recovery in exports can't be expected," said a senior government economist. "Emerging economies that previously served as the global engine of growth are slowing down."

He said he hopes business investment will take over from private consumption to sustain economic growth, noting there had been a rebound in such investment, up an annualized 21% in the quarter.

Whether Japan can return to strong growth after the sales tax rise depends on domestic reforms, especially in the services sector that makes up 70% of the domestic economy, said IMF economist Romain Duval.

"What we'd like to see is more decisive progress" in reform of the services sector and labor productivity, he said. "We've seen decisive progress in other areas. Less so in these areas."

Write to Mitsuru Obe at mitsuru.obe@wsj.com