Labor Department watchdog wants change in way jobs data is released

A Labor Department watchdog has called for a change in the way sensitive weekly jobs data is released to the public, recommending an end to the long practice of giving information to journalists first.

The decades-long “lockup” method, in which reporters “locked” into a room are given reports and forbidden to send out stories before an appointed time, must be tightened or abolished altogether, according to an audit from the department’s office of inspector general.

The audit could lead to a change in the practice of releasing market-moving economic data to the media first.

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The inspector’s office focused on problems with the release of the weekly jobless claims data, but its conclusions could extend to lockup procedures over such sensitive topics as inflation and economic growth.

With the advent of technology, even a minuscule advantage allows traders to gain an advantage in the market, the report concludes.

That information is quickly used by investors, such as high-frequency trading trading firms that use powerful computers to trade stocks in massive volume. Any efforts to change the current system will face heavy opposition from media outlets that make money by selling reports to investors, including these traders.

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The lockup system was “not originally designed to guard against market-moving distributions that could be caused by the release of government data to certain traders just seconds before the rest of the general public,” the audit said.

The Labor Department said in a statement that it agreed with the audit and was “exploring the value of the press lockup.”

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