Eurozone Struggles Continue; Germany Remains Region's Cornerstone

Europe appears to be stuck in a rut. Mario Draghi's years old promise of “whatever it takes” is now putting him in a position to act.

Manufacturing PMI has declined for the fifth consecutive month. Services PMI also contracted in September, registering an index value of 52.8 compared with August's value of 53.1.

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Looking at GDP growth in Europe, alongside the Morgan Stanley PMI-based GDP indicator, gives minimal hope for those expecting a Q3 growth rebound. Morgan Stanley is officially forecasting an EU GDP quarter-over-quarter growth rate in Q3 to be annualized 0.2 percent.

Addressing the likelihood of an EU rebound in 2015, Morgan Stanley analysts wrote, "We continue to think that a meaningful acceleration in economic activity in the euro area as a whole is unlikely in the near term, especially given the persistent weakness of the French and the Italian economies."

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Germany remains Europe’s cornerstone. Germans, according to Morgan Stanley, are the ones mainly responsible for the pent-up reading in business confidence. German PMI has accelerated, whereas in struggling places like France, the PMI contracts further to 49.1 in September from 49.5 in August.

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Europe continues to be very fragile. The ECB’s decision to execute its QE policy may help to prevent an increasing rate of deflation and what appears to be a fleeting level of business confidence.