State and local government spending increased in the second quarter of 2010 for the first time in a year as municipalities splurged on capital improvements, but economists cautioned that the growth is unlikely to continue in the second half.

State and local government spending increased at a seasonally adjusted ­annual rate of 1.3% for the quarter ending June 30 and contributed 0.16 percentage point to real gross domestic product, the sector’s largest percentage contribution since 2007, the Commerce Department reported on Friday in its advance second-quarter real GDP report. Overall, real GDP increased 2.4% for the quarter.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.