General Employment: fewer qualified applicants but fewer job slots

Employment agencies are generally a good economic indicator. General Employment Enterprises Inc. (Amex: JOB) specializes in permanent job placements for professionals in accounting, engineering and information technology, all fields where one would expect to find high demand for qualified applicants. General Employment Enterprises revenue is down a bit in both 4Q 2007 as well as FY 2007. Net income decreased slightly, and diluted EPS remained flat at $0.06. Such results do not bode well for national employment trends if companies are reluctant to hire accounting, engineering and IT professionals, even on a temporary basis.

CEO Herbert Imhoff stated that the decline in contract services (temporary employment) revenues in 4Q was an improvement over the larger decline in 3Q. But the fact that companies have fewer slots for contract employees is a troubling sign. CEO Imhoff also stated it is more difficult to find qualified applicants in the company's specialized fields. One would think that the company would have little difficulty finding placements for qualified candidates. This does not seem to be the case. General Employment is opening another office in California to offer both permanent placements and contract/contract-to-hire opportunities. The company is increasing its advertising budget for job boards and telephone marketing in an effort to enlarge its pool of qualified applicants.

The company has declared a special year-end dividend of $0.10 per share for the second year in a row, but that is merely a stop gap measure designed to placate shareholders who are not seeing any appreciation in the value of their investment. The stock currently trades at $1.65 with much room for improvement.