Technology and rate-sensitive industries face headwinds

Rapid escalation of interest rates in 2022 shifted the growth outlook for several key office-using sectors, and capital-dependent or rate-sensitive sectors, which had been leading employment growth through 2021, began to trim staff through large-scale layoffs in the second half of 2022.

Software-oriented technology companies, the biotechnology industry, and the home mortgage segment of the finance industry have experienced the most rapid change in employment growth to date, while others are seeing a more stable recovery or even accelerated employment growth in 2022.

Markets with more significant exposure to highly cyclical industries which are currently correcting headcounts will face additional headwinds during the first half of 2023: most gateway markets will benefit from their relatively diverse industry composition, with Chicago, Los Angeles, New York and Washington, DC all having a larger share of recovering or stable industry concentrations than the national average.