NAICS USA: North American Industrial Classification System (USA version)

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The North American Industry Classification System (NAICS) is the standard applied by Federal statistical agencies in the United States for classifying business establishments. NAICS was adopted in the US in 1997 in place of the Standard Industrial Classification (SIC) and is jointly maintained by the national statistical authorities of the US, Canada, and Mexico to facilitate economic comparison among the three North American countries. The classification system is hierarchical, with six levels ranging from broad business sectors to specific national industries.

Current Version: NAICS 2022

As notified by the Office of Management and Budget, NAICS 2022 took official effect in the United States on January 1, 2022.

Changes between NAICS 2017 and NAICS 2022

NAICS 2022 maintained the six-digit hierarchical structure in place since its inception. A major change in NAICS 2022 impacting specifically the Wholesale Trade (42), Retail Trade (44-45) and Information (51) sectors concerns delivery mode (internet vs. in-store) as a differentiating factor for industries. Unlike in previous versions, a distinction is no longer made between physical and online retail stores as many businesses now engage in both online and in-store trading. In other words, industries are classified according to the products they sell, not the mode of delivery. For example, under NAICS 2017 a jewelry retailer with a physical shop would be classified under jewelry stores (448310), while another selling only via the internet would be classified under electronic shopping and mail-order houses (454110). In NAICS 2022, both are identified as Jewelry Retailers (458310). The reconsideration of the mode of delivery therefore resulted in the re-coding and reconstitution of several activities mostly within the Retail Trade (44-45) sector.

Structure of NAICS 2022

NAICS 2022 is hierarchically structured, with the degree of specificity increasing at each level. As applied in the United States, NAICS is structured as follows:

  • Sectors: 20 sectors represented by two-digit codes. This is the broadest categorization in the NAICS system. For example, code 23 represents the construction sector.

  • Subsectors: 99 subsectors represented by three-digit codes. E.g., code "237" represents "Heavy and Civil Engineering Construction".

  • Industry Groups: 312 Industry Groups represented by four-digit codes. E.g., code 2371 represents "Utility System Construction".

  • NAICS Industries: 689 NAICS Industries represented by five-digit codes. These industries are even more focused than the 4-digit code, detailing a particular economic activity. E.g. code 23711 represents "Water and Sewer Line and Related Structures Construction".

  • National Industries: 1012 national industries represented by six-digit codes. This is the most specific classification in the NAICS system. It indicates sub-industries that are particular to the U.S., Canada, or Mexico. E.g. code 237120 represents "Oil and Gas Pipeline and Related Structures Construction" in the US.

The table below shows the number of subcategories in each of the 20 sectors in NAICS, based on US detail. At the finest classification level (6-digit Industries), the manufacturing sector is the largest of all 20 sectors in the NAICS system with 346 national industries, followed by "Wholesale Trade" with 69, and "Agriculture, Forestry, Fishing and Hunting" with 64. At the other end of the spectrum, "Management of Companies and Enterprises" has only three 6-digit industries.

Sector

Title

Subsectors (3-digit)

Industry Groups (4-digit)

NAICS Industries (5-digit)

6-digit Industries

U.S. Detail

Same as 5-digit

Total

11

Agriculture, Forestry, Fishing and Hunting

5

19

42

32

32

64

21

Mining, Quarrying, and Oil and Gas Extraction

3

5

11

14

7

21

22

Utilities

1

3

6

10

4

14

23

Construction

3

10

28

4

27

31

31-33

Manufacturing

21

86

176

249

97

346

42

Wholesale Trade

3

19

69

0

69

69

44-45

Retail Trade

9

24

48

16

41

57

48-49

Transportation and Warehousing

11

29

42

25

32

57

51

Information

6

11

24

10

19

29

52

Finance and Insurance

5

11

27

13

22

35

53

Real Estate and Rental and Leasing

3

8

17

11

13

24

54

Professional, Scientific, and Technical Services

1

9

35

20

29

49

55

Management of Companies and Enterprises

1

1

1

3

0

3

56

Administrative and Support and Waste Management and Remediation Services

2

11

29

25

19

44

61

Educational Services

1

7

12

7

10

17

62

Health Care and Social Assistance

4

18

30

16

23

39

71

Arts, Entertainment, and Recreation

3

9

23

3

22

25

72

Accommodation and Food Services

2

6

10

8

7

15

81

Other Services (except Public Administration)

4

14

30

24

20

44

92

Public Administration

8

8

29

0

29

29

 

Total

96

308

689

490

522

1012

Previous versions

NAICS 2017

As notified by the Office of Management and Budget (OMB), NAICS 2017 took effect in the United States on January 1, 2017.

Changes between NAICS 2012 and NAICS 2017

NAICS 2017 maintained the six-digit hierarchical structure in place since its inception. 20 new US Industries (six-digit level) were created in NAICS 2017 across six sectors. Notable additions were in the Oil and Gas subsector (211) with separate industries created for Crude Petroleum Extraction (211120) and Natural Gas Extraction (211130), which together constituted Crude Petroleum and Natural Gas Extraction (211111) in NAICS 2012. In the manufacturing sector, a new industry was created for Major Household Appliance Manufacturing (335220) combining four household appliance manufacturing industries from NAICS 2012.

Structure of NAICS 2017

NAICS 2017 was hierarchically structured into six classification levels, with the degree of specificity increasing at each level, as follows:

  • Sectors: 20 sectors represented by two-digit codes. This is the broadest categorization in the NAICS system.

  • Subsectors: 99 subsectors represented by three-digit codes.

  • Industry Groups: 311 Industry Groups represented by four-digit codes.

  • NAICS Industries: 709 NAICS Industries represented by five-digit codes.

  • National Industries: 1057 national industries represented by six-digit codes.

NAICS 2012

As notified by the Office of Management and Budget (OMB), NAICS 2012 took effect in the United States on January 1, 2012.

Changes between NAICS 2007 and NAICS 2012

The manufacturing sector was the focus of change in NAICS 2012, notably with respect to the classification of "Factoryless Goods Producers" (FGPs). It became necessary at the time to consider the outsourcing phenomenon whereby the actual production of the goods traded by an establishment is done by a third-party factory, local or international. This fragmentation of production might result in inconsistent classification of establishments if clear guidance is not provided. Following due consideration, the OMB decided that establishments should be classified in the manufacturing sector regardless of whether particular aspects of the production process were outsourced. Practical implications of this change were expected to be seen in statistical releases from key US government agencies. For example, in the Industry Economic Accounts produced by the Bureau of Economic Analysis (BEA), the measure of total output for the manufacturing sector was expected to increase because of the relocation of FGP output from the wholesale trade sector to the manufacturing sector.

Structure of NAICS 2012

NAICS 2012 was hierarchically structured into six classification levels, with the degree of specificity increasing at each level, as follows:

  • Sectors: 20 sectors represented by two-digit codes. This is the broadest categorization in the NAICS system.

  • Subsectors: 99 subsectors represented by three-digit codes.

  • Industry Groups: 312 Industry Groups represented by four-digit codes.

  • NAICS Industries: 713 NAICS Industries represented by five-digit codes.

  • National Industries: 1065 national industries represented by six-digit codes.

NAICS 2007

As notified by the Office of Management and Budget (OMB), NAICS 2007 took effect in the United States on January 1, 2007.

Changes between NAICS 2002 and NAICS 2007

NAICS 2007 was a relatively minor revision to NAICS 2002. Nine new industries were added to NAICS 2007, mostly in the information (51) sector, notable of which was that for "Internet publishing and web search portals" (519130). Several other industries from NAICS 2002, mostly under the manufacturing sector (31-33), were also divided into two or more industries in NAICS 2007.

Structure of NAICS 2007

NAICS 2007 is hierarchically structured into six classification levels, with the degree of specificity increasing at each level, as follows:

  • Sectors: 20 sectors represented by two-digit codes. This is the broadest categorization in the NAICS system.

  • Subsectors: 99 subsectors represented by three-digit codes.

  • Industry Groups: 313 Industry Groups represented by four-digit codes.

  • NAICS Industries: 721 NAICS Industries represented by five-digit codes.

  • National Industries: 1175 national industries represented by six-digit codes.

NAICS 2002

As notified by the Office of Management and Budget (OMB), NAICS 2007 took effect in the United States on January 1, 2002.

Changes between NAICS 1997 and NAICS 2002

In response to the emergence of the internet, notable changes in NAICS 2002 occurred in the Information sector (51) with the realignment or reclassification of some industries. The creation of new industries, like "Internet Publishing and Broadcasting" (516), and the separation of Telecommunications (NAICS 517) from other information services, addressed the growing role of digital media and internet services. Similarly, several industries in Wholesale Trade (42) of NAICS 1997 were reclassified in NAICS 2002 to provide more detail in the distinction between merchant wholesalers and business-to-business electronic markets. This reflected the rise of e-commerce and electronic supply chains.

Structure of NAICS 2002

NAICS 2002 is hierarchically structured into six classification levels, with the degree of specificity increasing at each level, as follows:

  • Sectors: 20 sectors represented by two-digit codes. This is the broadest categorization in the NAICS system.

  • Subsectors: 100 subsectors represented by three-digit codes.

  • Industry Groups: 317 Industry Groups represented by four-digit codes.

  • NAICS Industries: 725 NAICS Industries represented by five-digit codes.

  • National Industries: 1179 national industries represented by six-digit codes.

NAICS 1997

The first edition of NAICS took effect in the United States on 1 January 1997. NAICS was introduced in response to a rapidly changing economic climate and to facilitate a more accurate and modern classification of industries across North America, specifically the United States, Canada, and Mexico. Its predecessor, the Standard Industrial Classification (SIC), was developed in the 1930s and struggled to reflect the contemporary economic landscape with all its technological advancements. Moreover, with the activation of the North American Free Trade Agreement (NAFTA) in 1994, there was a clear need for a unified system for classifying industrial activity among member countries. NAICS was therefore jointly devised by the national statistical agencies of the United States (Office of Management and Budget - OMB), Canada (Statistics Canada), and Mexico (Instituto Nacional de Estadística y Geografía - INEGI) to facilitate the comparison of economic data across borders. The three national versions of NAICS are therefore known as NAICS Canada, NAICS Mexico (SCIAN Mexico, in the Spanish expression), and NAICS United States. As stated by the OMB, NAICS was designed according to a production-oriented or supply-based framework meaning that establishments using the same or similar production processes were placed together. As the former SIC system used a mixture of concepts to classify economic activity, NAICS initiated the use of a unified concept for industrial classification in the US.

Structure of NAICS 1997

NAICS introduced the six-digit hierarchical structure that has remained in place in the updates described above. NAICS 1997 was structured as follows:

  • Sectors: 20 sectors represented by two-digit codes. This was the broadest categorization in the NAICS system. In the old SIC system, the "Division" (denoted by alphabets) was the broadest level.

  • Subsectors: 96 subsectors represented by three-digit codes.

  • Industry Groups: 311 Industry Groups represented by four-digit codes.

  • NAICS Industries: 721 NAICS Industries represented by five-digit codes.

  • National Industries: 1170 national industries represented by six-digit codes. This was the most specific classification in NAICS 1997 indicating sub-industries that are particular to the U.S., Canada, or Mexico. Under the old SIC system, the finest level was the four-digit "Industry".

Where is it used?

Key US government agencies such as the Census Bureau, the Bureau of Labor Statistics (BLS), and the Bureau of Economic Analysis (BEA) use the industrial boundaries defined by NAICS to present a range of closely monitored data on different aspects of the US economy. NAICS codes are also used for the determination of business tax rates, application for business permits, construction of stock market indexes, and marketing purposes such as creating targeted business lists and finding potential clients. Beyond these general applications, NAICS codes have also been put to a more specific use by government agencies and academic researchers as detailed below:

  • Economic Analysis (Measuring "spillover potential" in government-funded technology projects): The National Institute of Standards and Technology (NITS) in the United States used a NAICS-based methodology to identify whether projects funded under its Advanced Technology Program (ATP) had a high spillover potential, i.e. the scope for broad-based adoption of ATP-funded innovations within the US economy. Based on three-digit NAICS codes initially provided by participants, six-digit NAICS codes were later assigned to project participants' own-industry and use-industries (own-industry refers to the primary industry of each ATP participant while the use-industry refers to the primary industry in which the commercial application will be employed). Six-digit NAICS codes allowed for more accurate measurement of potential spillovers and other related economic impacts from an ATP project compared to the three-digit level. As noted in a report, one measure of spillover potential is the extent to which project participants’ own-industry differs from the use-industries of their intended commercial applications. In this regard, both overall and across the five broad areas within which ATP projects are classified, over 80% of ATP participants identified at least one commercial application outside their own-industry’s six-digit NAICS code. Another measure of spillover impact was that 10 to 18 percent of ATP-funded innovations, depending on the technology area, involved licensing outside their own-industry. The report also details how NAICS codes (combined with figures on industry sales and employment) could be used to measure the impact of ATP-funded projects in a specific location (the state of Idaho) as well as impacts on the whole country.

  • Corporate Governance (Identifying "horizontal directors" in S & P 1500 companies): NAICS Association provides access to the NAICS codes of thousands of companies enabling private researchers and industry analysts to examine a range of issues. Yaron Nili (Duke University School of Law) has used such data to study the prevalence of "horizontal directorships" (i.e. individuals simultaneously serving on the boards of multiple firms in the same industry) which is prohibited by antitrust law in the US due to its anti-competitive implications. Nili's study tracks horizontal directors' participation on boards in the same industry for the S&P 1500 companies over 2010-2016 by augmenting Equilar’s BoardEdge dataset with NAICS codes (and industry classifications for groups of SIC and NAICS codes) provided by NAICS Association. Directors were identified as "horizontal" based on four classifications: whether they were on more than one board in the same SIC code, SIC industry, NAICS code, and NAICS industry. Nili's analysis shows that horizontal directors constitute a sizeable share of the directors in S&P 1500 companies: In 2016, 8.4% (369) of directors with more than one board position were on at least two boards in the same NAICS code. At the company level, Nili's analysis shows that over the study period, 17 to 23 percent of S&P 1500 companies had at least one horizontal director and five to nine percent had two or more (measured at the broader industry groups, the prevalence is much higher with over 80 percent of S&P 1500 companies over 2010-2016 having one horizontal director and 61-64 percent having two or more). The study contextualizes these findings in light of the benefits and drawbacks associated with horizontal directors.

  • Public Health (Locating tobacco retailers): As smoking remains a major public health concern, the geography of the tobacco business is of interest to public health analysts. In this regard, Daniel Rodriguez and coauthors created a geocoded data set of tobacco outlets in the US using NAICS codes obtained from NAICS Association. They identify 306,695 addresses across the US likely to sell tobacco products, including establishments coded as tobacco stores, grocery stores, gas stations and convenience stores based on which they estimate the "tobacco outlet density" and its demographic correlates for all 64,909 census tracts in the US. A related study by Sarah Halvorson-Fried and coauthors looking into the question of whether tobacco retailers are located near public schools in the US uses geocoded business data containing NAICS codes from Data Axle to identify 322,056 "probable tobacco retailers" from a larger list of 3,813,465 "potential retailer locations".

Upcoming versions

To maintain the relevance, accuracy, and timeliness of the classification system, NAICS undergoes a review every five years. A new version of NAICS is therefore expected to be released in 2027. The Office of Management and Budget (OMB) has tasked the Economic Classification Policy Committee (ECPC) with overseeing the review process. After gathering and evaluating public proposals for revisions, the ECPC submits its recommendations to the OMB. The OMB then makes the final decision on changes, considering public feedback and consulting with the ECPC. In this respect, a tentative schedule for the 2027 revision of NAICS notes that the review process will begin in December 2024 with a request for proposals from the interested public and end in June 2026 with the submission of the Manual to the OMB and the official publication of NAICS 2027 in January 2027. It has been pointed out that the current NAICS does not contain codes for many new types of activities in the creator economy including, for example, Youtubers and online influencers. The forthcoming NAICS might provide for these and other emerging activities in the digital economy.

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