By Stephen Gandel
June 7, 2013

FORTUNE — Good, but not too good. That’s what the market wanted, and that’s what it got.

In May, U.S. employers had 175,000 more workers on their payrolls than they did the month before. That made May the fourth-best job month for hiring out of the past eight. Any signs that we are headed toward a double dip recession are long gone.

Still, the unemployment rate rose for the first time seven months to 7.6%. So, yeah, whoopee!

But stocks shot up after the government released the May jobs number. What’s going on?

Part of it is a hope that the Federal Reserve won’t have to end QE anytime soon after all. Part of it is adjusting to the new normal, namely that jobs growth is as good as it can get right now. (Remember when 200,000 was the bar?)

There are even some people still clinging to a Brooklyn Dodgers “Wait till next year!” belief in the economy, even though there are few signs that 2014 will be any better.

But the reality is that it’s still pretty ugly out there. There are nearly 12 million people who are out of a job and looking for work. On top of that, there are another nearly 8 million people who have only been able to find part-time gigs.

MORE: Will the housing rebound crush the job market?

Two areas of the economy that added the most amount of jobs were retail and “accommodations and food services,” not areas known for their high wages or job security. Manufacturing lost 8,000 jobs. And despite the oft-touted housing recovery, construction added just 7,000 jobs — although seasonal adjustments partly explain why those numbers looked weak.

Here are three more signs that the jobs market is still just so-so:

1) We’ve added fewer jobs in 2013 than we did last year.

You know the “Are we better than a year ago?” test? Based on job growth alone we are failing. The number of jobs added through the first five months of the year is lower than 2012 and only slightly higher than in 2011. So the economy is still stuck at a middling level of job creation.

2) The unemployment rate is back above where the Fed would like it to be right now.

Many were hoping that the May jobs report would give a clearer picture as to what the Fed would do next — cut back on its bond buying stimulus or put their foot down further on the gas. But this “meh” jobs number doesn’t do that.

MORE: Ultra-low interest rates are making bonds unsafe

Chairman Ben Bernanke has indicated that if things continue as the Fed expects, he would pull back on stimulus in the next few months. But the unemployment rate is now slightly above where the Fed thinks it should be for this point in the recovery, which is between 7.3% and 7.5%. And it would not be a good sign if the unemployment rate keeps climbing.

3) Job growth has leveled off more quickly than other recessions.

In the early 1990s recovery, job gains accelerated for 35 months. After the 2001 recession, they did so for 28 months. But this time around, gains in the labor market appear to have already peaked after just 18 months. What’s more, the plateau is at a lower level than those other recoveries.

Still, many economists are predicting another pickup later this year or next. It’s not clear where those jobs would come from. Most people don’t think GDP will rise much more than 2%. And corporate profit growth has dramatically slowed. We have even had a few quarters where it was close to zero. If anything, profit margins, already at record highs, are likely to drop from here.

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