Unemployment claims fall but labor market struggles continue

Applications remain stuck above the 375,000 level that economists say reflects a healthy job market and would indicate the unemployment rate will fall. 

The economy was adding jobs at a fast clip during the last few months of 2011 and into the spring before labor market activity slowed to a crawl. 

The European financial crisis and congressional prospects to handle the so-called fiscal cliff — a looming mix of spending cuts and tax increases — could be weighing on employers' desire to ramp up hiring. 

Employers added 69,000 workers to their payrolls in May, the lowest level this year, raising concerns that the economic recovery was weakening. 

But economists have said they expect hiring to pick up again this summer after a lull through the spring that they consider "payback" for the rapid growth over the warm winter, which shifted some hiring. 

The June report will be released July 6 and will show whether these estimates are bearing out.  

The total number of people claiming benefits in all programs was 5.9 million for the week ending June 9, an increase of 71,724 from the previous week.

The Federal Reserve said last week that it anticipates the unemployment rate will stay stuck above 8 percent for the rest of the year, and that it will remain above 7 percent through 2014. 

Consumers' feelings about the economy continued their four-month slide in June despite falling gas prices, The Conference Board reported on Tuesday.

Still, the housing market, which many economists say is the key to a more robust recovery, is showing more signs of improvement, with home sales and prices on the uptick and homebuilders, who have shown more confidence in the sector's recovery this year, increasing construction. 

The number of people continuing to receive jobless benefits fell by 15,000 to 3.3 million in the week that ended June 16, which does not include those receiving federal benefits.