KEY DATA: Payrolls: +223,000; Revisions: -39,000; Unemployment Rate: 5.4% (down 0.1 percentage point); hourly wages: +0.1%

IN A NUTSHELL: “Not too strong is not strong enough.”

WHAT IT MEANS: Wrong again. Yes, job gains improved in April, but they were nothing special. We averaged about 250,000 new positions a month during the previous twelve months so why anyone would like 223,000 is beyond me. The gains were fairly broad based but no sector, other than construction, really stood out on the positive side. Restraining the total was continued energy sector layoffs. Mining and logging was down 15,000. So, instead of adding jobs, this sector is now cutting them. The gains in retail were mediocre and manufacturing has largely flatlined.

The unemployment rate fell to its lowest level in nearly seven years. The decline came as the labor force and participation rate increased while the number of people unemployed and the number of people working part-time for economic reasons declined. So, it is hard to criticize the decline.

But the discouraging news was in the wage data. Despite the shrinking availability of workers, hourly wages continue to rise modestly. I am not sure how good this measure is, but it is watched carefully and that is all that matters, as it is not showing any signs of growing wage pressures.

MARKETS AND FED POLICY IMPLICATIONS: If you think the continuation of the bull market is the most important thing, then this report was tonic. If you think that a strong economy is critical, then this report was disappointing. Yes, job gains improved, but they were not particularly great and the revisions indicate that firms didn’t “hire ‘till they were tired” in the first quarter. In addition, despite a seven-year low in the unemployment rate, wages have yet to rise solidly on any sustained basis. I believe that every one of the Fed members would like to see an economy so strong that they have to raise rates. They don’t have one yet. We are almost six years into the expansion and it is getting a bit old. The Fed needs to get back to normal rates and the sooner the better. This report doesn’t force anyone’s hand, so it is not likely we will get a rate hike in June, even if job gains surge and wages jump in May. One month is hardly a trend. So investors may love this report as it puts off the day of reckoning, but that only raises the risks of this extended low rate policy.