U.S. durable goods orders came in stronger than expected for January, boosting hopes for economic recovery.

BMO Nesbitt Burns calls the report “great news”, saying that it should boost stocks. New orders rose 2.6%, the third increase in the last four months. Tech orders were especially robust, BMO notes. “This looks like the real thing and might be backed up by a strong ISM report on Friday.”

“Although markets usually focus on new orders, it is worth noting that order backlogs are still declining. This means that the rise in bookings was not large enough to match the ongoing level of shipments, and suggests that it will take a couple of more months of order increases before the stage is fully set for a sustainable rising trend in production,” says BMO.

“Today’s durable orders report was the sort of information that Greenspan might grind into his policy thinking,” BMO suggests. “It is early days yet, but this does give us pause about the length of time it will take before the Fed begins to take back some of its aggressive easing. To move further along the road, we would definitely need a solid, above-50 reading from ISM on Friday and then a full flowering of the manufacturing rebound in February. No question about it — the U.S. economy is getting better.”