April's jobs report fell squarely in the goldilocks zone. Adding 223,000 jobs, hiring rebounded from the previous month's lull and was strong enough that markets were encouraged in their outlook for the broader economy. It was not so strong, however, that investors turned to panic in anticipation of an imminent interest rate hike. Instead, the ten-year Treasury yield shaved a few basis points while stock markets moved sharply higher. 

The unemployment rate declined to 5.4 percent, the lowest level in seven years, while the broader U-6 measure of labor underutilization also gave up 10 basis points, slipping to 10.8 percent. Many of the secondary measures of labor market health were practically unchanged, consistent with prodding gains in the jobs market. An ongoing challenge for policymakers and academics, the participation rate recouped 10 basis points but remains near its lowest point in decades. The employment-population ratio was unchanged at 59.3 percent. Both for the participation rate and the employment ratio, demographics offer an incomplete explanation.

What next? Keep looking for signs of stronger wage gains. Private sector wages hardly budged in the new report, with average weekly earnings increasing by just 0.1 percent from March to April. If job growth continues at its current pace and the number of Americans engaged in the labor market does not improve appreciably, the unemployment rate should fall to the lower bound of the Fed's estimate of its long-term range within the next four to five months. At that point, a textbook analysis points to more meaningful wage growth and a basis for a rate adjustment. Rather than rocking the summer boat, bets are the Fed will wait till September.