Surging PMIs are validating Goldman Sachs's very optimistic outlook for global growth in 2011:
"Global growth accelerates to a 4½-5% pace as we enter 2011. Last week we saw UK Manufacturing PMI – which was the last of the majors to be released and it continued the pattern of positive surprises in December. The headline index rose from 57.5 to 58.3, the strongest reading since 1994, and the composition of the report was also positive (the orders sub-index rose from 56.8 to 58.7, while stocks fell from 53.1 to 50.0). Taking all the PMIs together, our PPP-weighted Global Manufacturing PMI rose from 54.7 to 55.7. In our Global Viewpoint last year we argued that the PMI data provided the best real-time information on current global growth (while the GLI is the most important indicator of future growth). Using a simple regression-based model discussed in that piece, the latest PMI readings are consistent with global growth rising to a 4½-5%qoq annualised pace as we head into 2011. This is broadly consistent with our global growth forecasts, which envisage an acceleration in global growth in 2010Q4/2011Q1 and full-year growth in 2011 of 4.8%. But the latest data implies significant upside risk to the consensus forecast of 4.1% growth in 2011."
