By Adam Rose
BEIJING (Reuters) - Activity in China's factories shrank again in February as employment fell at the fastest pace in five years, a preliminary private survey showed on Thursday.
The flash Markit/HSBC Purchasing Managers' Index (PMI) fell to a seven-month low of 48.3 in February from January's final reading of 49.5.
A reading below 50 indicates a contraction while one above shows expansion.
The preliminary February index, which shrank in every category except suppliers' delivery times, indicates that a mild slowdown which began late last year continues.
The weak China preliminary index for January was believed to be one cause of last month's selloff of emerging market assets.
In February, the employment sub-index slid for a fourth straight month, to 46.9, its lowest point since February 2009, during the global financial crisis.
The jobs sub-index in the PMI is one of the few indicators around that measures the health of China's labor market, an area of priority for Beijing which wants to keep unemployment low to maintain social stability.
The survey showed the new orders sub-index fell below 50 for the first time in seven months, while new export orders was higher than in January, but remained below 50.
"The building-up of disinflationary pressures implies that the underlying momentum for manufacturing growth could be weakening," said Qu Hongbin, chief economist for China at HSBC, in a comment accompanying the PMI data.
"We believe Beijing policymakers should and can fine-tune policy to keep growth at a steady pace in the coming year."
The Lunar New Year festival, which began on January 31 and covered early February, likely affected factory output as manufacturers shut shop for China's biggest annual holiday.
Another factor in the slide is the government's ongoing attempt to restructure the economy away from exports and towards domestic consumption. This has cooled investment growth - a main engine of China's economy - to its lowest in at least a decade.
Thursday's data will be the latest sign of struggle in China's factories. A series of PMIs in January showed growth in China's manufacturing and services sectors at multi-month or multi-year lows. But those disappointing PMI readings were countered by surprisingly buoyant growth in exports and bank lending, which suggested that the world's No. 2 economy was not faring as badly as some feared.
China's full-year growth for 2013 was 7.7 percent, steady from 2012 and just slightly above market expectations of 7.6 percent, which would have been the slowest since 1999.
The Markit/HSBC PMI is more weighted towards smaller and private companies than the official index, which contains more large and state-owned firms.
The final Markit/HSBC manufacturing PMI for February is due on March 3 and the official manufacturing PMI will be released on March 1.
(Reporting by Adam Rose; Editing by Richard Borsuk)