A Brief Guide About NAICS (North American Industry Classification System)

NAICS or the North American Industry Classification System is a standard used in Canada, the United States and Mexico. The standard is used by all federal agencies working on statistical analyses pertaining to the business economy across North America. NAICS has a business activity classification codes list that is used by all registered companies and it includes all recognized and well formed industries. NAICS plays an integral role in accumulating, assessing and publishing data and statistical analyses pertaining to the North American economy.

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Developed by the Office of Management and Budget or OMB in 1997, NAICS replaced the existing Standard Industrial Classification system or SIC. NAICS was developed by Statistics Canada, the ECPC or Economic Classification Policy Committee of the United States and Instituto Nacional de Estadistica y Geografia of Mexico. NAICS has a published business activity classification codes list which companies must apply for and the codes would be used by any and every organization collecting, assessing and publishing data relating to the economy and specifically reporting on an industry or type of business. The NAICS Manual also lists the definitions for each industry and background information on the various classifications.

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NAICS: Explained. The NAICS code is a six digit number. There are codes for twenty different sectors, the sectors have ninety nine subsectors, there are a further three hundred and twelve industry groups and seven hundred a thirteen industries. An NAICS code’s first two digits is the business sector. Third digit is for the subsector. Fourth digit is for the industry group. Fifth digit is for specific industry. Sixth digit is the exact type of business in that industry. For instance, the first two digits ‘11’ is for sector that includes agriculture, fishing, forestry and hunting. The third digit is subsector; example ‘111’ is for crop production. The fourth digit is industry group; example ‘1113’ is fruit and tree nut farming. The fifth is industry; example ‘11133’ is non-citrus fruit and tree nut farming. And finally the sixth code depicts the US industry; example ‘111331’ is apple orchards.

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NAICS: Significance. The NAICS is not a global classification system but every country or union of counties has its own standard. NAICS is significant in this day and age of globalization. Statistical assessments and accurate analyses are at the heart of understand the constantly evolving economic challenges. Even understanding the present economy takes painstaking study and it is impossible to keep a track of all industries or even to track activities of a particular industry without a business activity classification codes list.

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