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North American Industry Classification System

NAICS was developed jointly by the U.S., Canada, and Mexico to provide new comparability in statistics about business activity across North America and replaces the Standard Industrial Classification System that was specific to industry in the United States. In this "production-oriented" classification system, establishments that use similar processes to produce goods or services are grouped together under an assigned classification code. These NAICS codes present data that can be used for measuring productivity, unit labor costs, and the capital intensity of production; constructing input-output relationships; and estimating employment-output relationships and other such statistics that require that inputs and outputs be used together.

NAICS is a heirarchical industry classification system that groups establishments into industries based on the activities in which they are primarily engaged. NAICS uses a 6 digit system to classify all economic activities into 20 sectors composed of 1,170 industries. The first two digits of the NAICS code identify the sector to which an industry belongs, the third designates the subsector, the fourth designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry. Subsectors, industry groups, and NAICS industries follow the same organizational principle found in the sector level of NAICS, but production definitions are more narrowly defined.

An establishment is classified to an industry when its primary activity meets the definition for that industry. If an establishment has multiple activies, it is classified based on the principle activity (i.e. product or products produced or distruted, or services rendered) of the establishment.

Economic and business data presented in County Business Patterns, Economic Censuses, and other U.S. agency releases utilize the NAICS classifications as a standard. However, data released before 1997 utilizes the Standard Industrial Classification (SIC) system. The U.S. Census Bureau has an online 1997 NAICS and 1987 SIC Correspondence Table, http://www.census.gov/epcd/www/naicstab.htm. This table allows users to find the closest corresponding industry classifications when comparing data classified under different systems.