The North American Industry Classification System (NAICS) is a classification system for industries used by the US Census Bureau and other organizations. It replaced the Standard Industrial Classification (SIC) in 2003 and has 20 major categories. NAICS codes are six digits and indicate the industrial sector, sub-sector, industry group, specific sector, and country-specific digit. The top 20 divisions include five in goods manufacturing and 15 in services. A NAICS website and search tool are available, and the system is reviewed every few years to stay current.
The North American Industry Classification System (NAICS) is a system that classifies certain industries according to specific parameters. The main purpose of the system is to provide a classification system for the US Census Bureau, the Bureau of Labor Statistics and other organizations that can borrow its parameters. The North American industry classification system was a product of cooperation with Canada and Mexico.
First introduced in 2003, the North American Industrial Classification System was designed to replace the Standard Industrial Classification (SIC). The SCI was devised in the first half of the 20th century and was considered obsolete as the types of businesses changed over the years. This was especially evident when the information economy began to take hold in the late 20th century. The number of major categories has increased from ten in the SIC to 20 in the North American industry classification system.
To understand the North American Industry Classification System, you must first understand the NAICS codes. These are broken down into a six-digit number. The first two digits indicate the industrial sector, while the next one indicates the industrial sub-sector. The fourth digit indicates the industry group. The fifth digit indicates what the specific sector is. The last digit can mean different things in each of the different countries and is the one digit that isn’t uniform across the board.
The top 20 divisions of NAICS include five in NAICS industry, or goods manufacturing sections, and 15 in other NAICS business sections, which are specific to the services sector. Industry classifications include: agriculture, forestry, fishing and hunting; extraction; utilities; construction; and manufacturing. The services sector includes: wholesale trade, retail trade, transport and warehousing, information, finance and insurance, real estate, professional services — including scientific and technical — management, administration and support of waste management and remediation services, education, social work, the arts — including entertainment and recreation — hospitality, other services, and public administration.
To help industries get used to the new classification system, a NAICS website has been created which includes a NAICS search. This is a keyword-searchable database, just like you might use it for an Internet search engine. NAICS searches can also be performed from manuals specifically dedicated to the new standard, although the electronic version is likely to be easier to use.
While the categories have been established for some time, the NAICS is frequently revised to keep it current and reflect the current business situation. Reviews happen every few years and the public is invited to provide input on what improvements are needed. This helps prevent the system from becoming obsolete, as happened in the case of SIC.
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