NEW YORK (TheStreet) -- The 223,000 new jobs created in April was certainly good news for the markets, but it doesn't settle the debate on whether the economy is growing fast enough to push the Federal Reserve to raise interest rates anytime soon.
The nation's unemployment rate slipped to 5.4% last month, the Labor Department said Friday, the lowest since May 2008. The report was almost exactly in line with forecasts.
While Wall Street rallied on Friday's jobs report, the markets are still hung up on the outlook for both stocks and interest rates.
One side of the narrative is that the economy is stalling, meaning rates will stay near zero for longer. That view was fueled by the economy's dismal first-quarter growth rate of 0.1%. That led economists such as Bank of America Merrill Lynch's Ethan Harris to cut outlooks for the second quarter and the year.
In this view, the economy will be lucky to match last year's 2.4% growth rate as productivity and investment peter out and inflation falls even farther below the Fed's 2% target.
The other has been a bottom-up view that maybe things aren't quite that bad. Interest rates have been rising without any Fed intervention, as conditions in Europe improve and corporate earnings come in better than most analysts expected.
Merrill Lynch strategist Savita Subramanian points out that after 80% of S&P 500 (SPY) companies reported, first-quarter profits were actually on pace to improve slightly from last year's first quarter.
"What EPS recession?" Subramanian wrote on Monday.
The jobs report doesn't neatly fit either narrative -- and that means no clear outlook for rates yet.
On the plus side, some cyclical industries did terrifically last month. Construction added 45,000 jobs -- something that would be a clear sign of a pickup if not for the sluggish level of housing starts by companies like D.R. Horton (DHI) and PulteGroup (PHM) and commercial construction. Leisure and hospitality added 17,000, in a sign of more disposable income.