The April employment report was simply lousy. A gain of 160k jobs is better than a loss, but everything has been counting on gains on the order of 200k or better. The stock market largely shrugged it off, rising slightly. But is this really bad news? Is it real? Can we expect a big slowdown in job growth in 2016?

The answers are maybe, yes, and no. But we have to watch that last one to make sure because a lot may be riding on it – especially in an election year.

Waiting around for a job?

Along with the bad news on job creation, there was a lot of good news. Hourly wages are up 2.2%, which is pacing well ahead of official inflation. That means that there is some pent up demand for workers, probably in a few skilled areas. We also are seeing a record low rate of job loss, with the four week average of initial claims for unemployment hitting 258k, a level not seen since 1973 – when the total workforce was about half what it is now.

Employers are not hiring, but they’re also not firing. With hourly wages creeping up this is starting to look more like a “skills gap” kind of problem as very new jobs are created.

If we dig a little deeper, however, we can see where some of the problem comes from. When the stock market fell in January and February, a chill went through large and medium sized companies who are more responsive to shareholders. Indeed, the drop in April’s net employment can be seen entirely at the high end – small businesses created more jobs in April, 93k vs 86k. Medium sized companies fell from 75k created to 39k.

Large companies are still lagging in job creation, down from 39k to 24k. They are still simply not hiring – and never were.

The fuure has to have room for everyone, ‘cuz we’re all going there.

This is all very much in line with the terrible 0.5% annualized GDP growth seen in the first quarter. We have seen a trend towards weak first quarters in recent years, but this year should have been better. It wasn’t. It’s critical to see if things pick up soon because it’s not looking great for a big turnaround starting in 2017, as Barataria has projected.

Or is it? If April was only a blip we should return to robust growth shortly. Year over year growth is still good, outpacing the growth of the population. It has slowed slightly since it really picked up in 2012, but overall job growth has been pretty good for an economy that is not turning over from the recent depression too rapidly.

Year over year growth in jobs (blue line) is still outpacing growth in population (red). From the St Louis Federal Reserve

But is this good enough? With 5% headline unemployment and (much more importantly) the total underemployed figure at 9.7% there is room for improvement.

Who will replace him when he’s ready to rest?

It will take some time to see if this mixed bag of figures really does point to a skills gap among the workers who are still without jobs, meaning that 5% may be tough to crack. It will take a lot more training, which means a lot more investment in our workforce by either government or employers. Given that the real job growth is coming from small businesses, overwhelmingly, there is probably a place for government to step in. That’s not in the cards for years at this rate, unless states step up quickly.

Meanwhile, there is a lot to keep an eye on. The net growth in jobs is not catastrophic, but it is a warning sign. Given the fall in GDP it may be a permanent fixture, but there is still a lot of investment in the future by small companies, at least.

The growth in wages is robust and very encouraging. The growth in jobs is not. The prospects for the next few months as we head into the election are very hard to read, but it seems that those with jobs are doing well and those without jobs have less hope. It’s all worth keeping an eye on for many reasons.