The number of Americans filing applications for unemployment benefits fell sharply last week, suggesting the labor market was holding firm despite a manufacturing slowdown and concerns the economy is on a path toward recession.

Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 209,000 for the week ended Aug. 17, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.

The decline was sharper than expected. Economists polled by Reuters had forecast claims would drop to 216,000 in the latest week. The Labor Department said data for Kentucky for last week was estimated.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, edged up 500 to 214,500 last week.

Last week's claims data falls during the same week the Labor Department conducts surveys used to estimate national employment during the month of August.

The four-week average for new unemployment benefits claims was lower than the corresponding week in July, a positive signal for employment during the month.