Jobs Data Simultaneous Release Jeopardized Under Curbs
The U.S. Department of Labor said it can’t promise journalists they will be able to transmit market-sensitive economic releases at exactly the same time under changes resulting from the first review of procedures in a decade.
The agency ordered media organizations to remove computer software, hardware and communications lines they have installed at the department to transmit news on data such as the unemployment rate and consumer prices. Instead, reporters will have to use government equipment, software and Internet connections.
“I’m not going to guarantee anything,” Carl A. Fillichio, the department’s senior adviser for communications and public affairs in Washington, said on a conference call when asked if every news organization will be assured a connection to the Internet “at exactly the same millisecond.”
Under the current system, credentialed journalists in so- called lockups are given data in advance of their release to the public, allowing time to prepare stories, headlines and tables. Communication by phone or computer is cut off for the half hour that reporters are typically given to write their stories. A Department of Labor employee then flips a switch that opens telephone and data lines, allowing journalists to transmit their stories using their own equipment.
Bloomberg News is among the organizations that participate. Bloomberg has written to the Department of Labor opposing the changes.
“There are few government reports that have the wide- ranging impact on the market as the Department of Labor statistics, and we are troubled by the degree of government restrictions on how the press can fully and accurately report this data to the public,” said Matthew Winkler, editor-in-chief of Bloomberg News.
With the new system, journalists in the lockup will have to rely on government-provided Internet access to send their stories, with no guarantee they can connect to the Internet at the same time. Currently, news organizations taking part in the lockups can maintain their own lines. The changes would take effect with the release of data on the unemployment rate and non-farm payrolls on July 6.
“If some investors will be getting this information before others, that will create a discrepancy in the markets, and I suspect the SEC will be interested in addressing the issue,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., which oversees about $370 billion, said in an e-mail. The Securities and Exchange Commission, or SEC, is the government agency tasked with protecting investors and maintaining fair and orderly markets.
No Comment Sought
The changes were announced without providing news organizations any opportunity to comment in advance.
Directives from the Office of Management and Budget give the Department of Labor “the option of offering pre-release access, and if we exercise that option we are also required to establish procedures and security arrangements,” Fillichio said on the conference call. A recording of the call is available on the department’s website.
“You want everyone to get access to the information at precisely the same time,” said Brian Jones, a senior U.S. economist at Societe Generale in New York. “Anything that reduces the integrity of that system is something you don’t want. We’re relying on the quality of their release and distribution system. It could introduce some additional volatility around the time of the release.”
Fillichio said that because every news organization will have the same government-provided equipment, “we are totally leveling the playing field.” Reporters will also be provided with pens and paper.
“This doesn’t strike me as good public policy or good for investors,” said Bonnie Baha, head of the global developed credit group at DoubleLine Capital LP in Los Angeles, who helps oversee $32 billion. “This is not leveling the playing field as much as it is seizing control of the means of communication.”
The department isn’t required to offer lockups, Fillichio said. “This is a courtesy we provide,” he said. “And let me say it’s one that I think is important and very well worth doing, but it and participation by news organizations in it, is not a right.”
The changes were intended to improve security, Fillichio said. He cited “violations of the embargo and the use of equipment in the lockups,” while declining to provide specifics.
“We are not going to comment on security issues,” he said. “There have been consequences when someone was caught breaking the rules,” he said, adding that “two individuals of different news organizations were suspended from participation” over the past two years. He didn’t name the individuals or their news organizations, nor did he specify the alleged infractions.
Journalists have also been told to reapply for lockup credentials and that space may be limited.
In an April 10 letter to journalists, Fillichio said “the purpose of pre-release access would be best served” if the process resulted in a group of organizations that “distribute a variety of types of news/media products that reach a wide and diverse audience.”
“The department will not consider editorial or political viewpoints in making credentialing decisions,” he said.
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