The North American Industry Classification System (NAICS)

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The North American Industry Classification System (NAICS)
What is NAICS?
NAICS, pronounced "NAKES", is the new standard for the industrial classification of businesses. It replaced the Standard Industrial Classification (SIC) system that has been in place since 1930. NAICS is not a revision of SIC, but a new and more comprehensive classification system.

NAICS was established in 1997 through a cooperative effort among the United States, Mexico, and Canada. NAICS was developed based on the economic concept that establishments should be grouped together according to similar production processes. This coding system focuses on the identification of new and emerging industries and high technology industries, and provides increased detail in the services sector over what was available under the SIC system. The increased detail necessitated increasing the length of the code of six digits from the four used by SIC. Under NAICS, the highest level of aggregation is the sector, of which there are 21. This compares to the 10 divisions available under the SIC system.

NAICS includes nine new service sector aggregations that were not found under the SIC system. The treatment of auxiliaries will change under NAICS. Auxiliaries are worksites within a company that primarily serve other establishments within the same company (examples are warehouses or corporate offices.) Under NAICS, auxiliary units will carry the NAICS code for their primary activity, while under SIC auxiliary units were classified according to the primary activity of the company they served.

The U.S. Census Bureau has more detailed information about the NAICS at: http://www.census.gov/epcd/www/naics.html.

Because of the differences between NAICS and SIC, information produced with NAICS will be incomparable with any prior data.

NAICS Implementation

The BLS (Bureau of Labor Statistics, U.S. Department of Labor) program that tabulates wages and employment, the ES-202, switched to NAICS beginning with calendar year 2001 data. The 2001 wage and employment information will be available in both SIC and NAICS formats. After 2001, the ES-202 will be in the NAICS format. Other BLS program will begin publication based on NAICS effective with data year 2001. (See table below.)

How NAICS affects you.

Every sector of the economy has been re-defined and restructured creating a complete time series break. Any industry level totals or projections, such as retail sales or manufacturing employment, made before NAICS, are incomparable with any similar data created after NAICS.

Any files containing an industry code will need to be modified to hold the six-digit NAICS code instead of the four-digit SIC. Businesses will be requested to supply more detailed industrial descriptions to government agencies, trade associations, and other collectors of information. Labor market information will be more detailed than is possible with SIC. The United States, Canada and Mexico will produce comparable data for the first time. Industrial grouping will be reflective of current economics.

Examples Of New NAICS Industries

Automotive oil change & lubrication shops
Bed-and Breakfast Inns
Casino Hotels
Cellular & Other Wireless telecommunications
Convenience stores
Credit card issuing
Diet & weight reducing centers
Fiber optic cable manufacturing
Food (health) supplement stores
Gasoline stations with convenience stores
Management consulting services
Pet care services
Satellite telecommunications
Semiconductor machinery manufacturing
Software publishers
Telemarketing bureaus
Temporary help services
Warehouse clubs & superstores

BLS Implementation Schedule

Year Program

2001 Covered Employment and Wages - ES202

2002 Occupational Employment Statistics
Mass Layoff Statistics

2003 Current Employment Statistics
Productivity measures for selected industries
Foreign Labor Force Statistics
Current Population Statistics

2004 Employment Projections
National Compensation Survey
Producer Prices Index

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