"The U.S. economy is in good shape on a global basis. I don't think we're going into recession this year, but it's definitely declining," said Rick Rieder, BlackRock's chief investment officer of global fixed income. Rieder agreed that the reason for lower job growth is twofold.
"We've taken out so many qualified applicants but then it's happening contiguous to the fact that companies are cutting back on capex, cutting back on inventory and cutting back on hiring," he said.
Rieder sees a 35 percent chance that the Fed will not move at all on a rate hike this year, and a 30 percent chance that it cuts just once. The Fed's forecast has been for two rate hikes, and central bank officials have said they will consider an increase at every meeting, basing their decision on the economic data and financial conditions.
John Canally, economist and strategist at LPL Financial, said the Fed would still consider 150,000 jobs as enough to tighten, while the markets would not. He too expects a slower rate of hiring.
"It's probably going to downshift into the 150,000 area. It just has to. We're later in the business cycle. Just from the math alone, we've added a lot of jobs," he said.
Adding to the disappointment around the jobs report was a downward revision in February and March jobs of 19,000 workers, and a slight decline in the participation rate to 62.8 percent. Government jobs also dropped by a surprising 11,000.
Diane Swonk, CEO of DS Economics, said the hit from government declines in April was big, since it was expected to be positive. "It was a swing month to month of 25,000. Government was the Achilles' heal," she said. Barclays said the government losses were postal workers and local government education services.
But overall Swonk said the report had some silver linings.
"There are fewer but better-quality jobs. They're dominated by business and professionals. It's new college grads. It's part of the reason why year over year, we had an acceleration in wages. They are full time, science, engineering and accounting," she said.
The professional and business sector added 65,000 jobs in April. Health care rose by 44,000 and financial activities rose by 20,000. Mining employment continued to decline, falling by 7,000.