The April Employment Report disappointed stock market participants. However, it really wasn’t a bad report. Private-sector job growth has been moderately strong this year. The Household Survey data suggest that the economic expansion has been strong enough to absorb the growth in the working-age population, but not enough to take up much of the labor market slack that was generated during the downturn. These figures tell us nothing about where the labor market is headed. Job growth over the next six months will have important implications for investors and for the November election.

One should never put too much weight on any one month of employment data. These figures are subject to revision, and further revision. However, the recent employment reports have painted a consistent story. This was an unusually mild winter. As a consequence, the December-to-January decline in unadjusted payrolls was lower than usual and the February payroll gain was higher than usual. The seasonal adjustment turned these into outsized gains in January and February. The March and April payroll gains, in turn, were biased lower.

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Seasonally adjusted private-sector payrolls averaged a 207,000 monthly gain over the first four months of the year (and a 199,000 average over the last eight months). We’d like to see payrolls rising by 250,000 to 300,000 per month over three or four years to return to full employment, but the recent pace has been respectable. State and local government payrolls fell by 11,000 in April, reflecting continued budget strains, but the pace of job losses is less than in 2011.

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The unemployment rate, having peaked at a little over 10% in October 2009, has continued to trend lower. However, that’s partly due to decreased labor force participation. There are two issues here. One is demographics. Participation will trend lower as the baby-boom generation moves into retirement (and the soft economy likely contributed to earlier retirements). The other is discouraged workers. As individuals exhaust their unemployment benefits, they have a tendency to stop looking and are therefore no longer classified as “unemployed.” The employment/population ratio, a better measure of slack in the labor market, has been relatively flat over the last two years.

The April Employment Report tells us nothing about the likely pace of job growth over the next several months. However, the outlook for moderate job growth this year should be relatively unfazed by the recent job numbers. Many of the recovery headwinds are still with us (housing, state and local government budget strains), but their impact on growth should be decreasing over time. Bank lending to consumers and small businesses is gradually getting easier. A recession in Europe will mean slower U.S. exports, but that’s not enough to seriously slow overall economic growth. The bigger factor in the short term may be gasoline. Higher gasoline prices dampened consumer spending and business hiring in the late spring and summer of last year. It looked like we were in store for a repeat this year, but gasoline prices have begun to back down. A sharper decline in gasoline prices could help fuel economic growth this summer.