COP 28, UK Unemployment, and Ukraine Conflict in Focus

Next month delegates, business leaders and academics from all around the world will meet for the United Nations Climate Change Conference, or COP 28. The meeting, which lasts a little under two weeks, will be held at the Expo City, Dubai and follows last year’s event at Sharm El Sheikh where the UN Climate Change Executive Secretary Simon Stiell called for “every corner of human activity” to work towards keeping global warming within the 1.5°C limit (above pre-industrial levels).

According to the UN however, the world is off course to keep global warming within this bound, with one report by UN Climate Change indicating that the “implementation of current pledges by national governments puts the world on track for a 2.5°C warmer world by the end of the century.”

As the world gears up for Dubai, yesterday 130 companies including Volvo, eBay, Heineken, Ikea and BT called for the implementation of a timeline to move away from fossil fuels in an open letter to COP 28. The companies, whose collective annual turnover is around $1tn USD, argued that countries at the summit ought to commit to achieving 100% decarbonised power systems by 2035 for richer countries and 2040 for developing economies at the latest.

Their letter will try to grab the attention of the COP28 President Sultan Al Jaber – who serves as the CEO of the state-owned Abu Dhabi National Oil Co.

This morning has seen UK unemployment fall marginally by 10bps to 4.2%, suggesting that the labour market may be holding up better-than-expected amid tighter monetary conditions. This morning’s print came in softer than the expected 4.3% consensus but nonetheless marks one of the highest prints in two years.

The publication (which came a week later than usually scheduled) comes as the ONS altered its data collection method. Here the ONS stated that “we are publishing an alternative series of estimates of UK employment, unemployment, and economic inactivity as experimental statistics. The experimental figures were derived using growth rates from Pay as You Earn Real-Time Information and the Claimant Count for the periods from May to July 2023 onwards.”

In a tweet yesterday, the UK’s Ministry of Defence stated that “Russian Ministry of Defence and private military contractor (PMC) forces have likely suffered 175-200,000 casualties since the start of the invasion of Ukraine. This likely includes approximately 40-60,000 killed.” The MOD also said that when including short term casualties (that have since returned to the battlefield), this number could range from 240,000-290,000.

In other news, the Ukrainian war effort – which has relied heavily on drones – may be about to face supply-side challenges given China’s plans to implement exports controls. According to the Royal United Services Institute, Ukraine is losing about 10,000 drones a month, with much of its supplies coming from commercial Chinese manufactures. However, China has recently unveiled plans to try to ban any commercial Chinese drones being used for military purposes.

Today will markets turn their attention to the release of PMI figures released through the Eurozone, the UK and the US. Here, markets will be looking for an insight into the health of these respective economies amid tighter monetary conditions and the recent surge in energy prices, seen over much of September. Markets will also be looking for an indication into the health of labour conditions in relation to respondents as well as supply and demand side trends. Any changes in the level of economic activity will be closely watched by central bank policy makers ahead of the next round interest rate decisions.