Government bodies and businesses in the United States, Canada, and Mexico use the North American Industry Classification System (NAICS) to classify business establishments based on specific economic activities in which they partake. While an establishment usually represents a single physical location, distinct administrative activities at single locations may be regarded as separate establishments.

What is NAICS?

The United States worked on creating NAICS largely for statistical reasons. Now, the system finds widespread usage in various non-statistical purposes, some of which include contracting, administrative, taxation, and regulatory. Businesses in some American states receive tax benefits if they are classified in relevant NAICS-specified industries.

While a business establishment gets one NAICS code that identifies its primary activity, it may get multiple codes to represent its various offerings, be it goods, products, or services.

NAICS codes follow a two-through-six digit hierarchical system of classification, providing five levels of detail. As the code progresses, the categories get increasingly narrower. The structure of a NAICS code is as follows:

  • The first two digits represent the economic sector.
  • The third digit identifies the subsector.
  • The fourth digit points to the industry group.
  • The fifth digit denotes the NAICS industry.
  • The sixth digit represents the national industry.

NAICS codes are comparable in definitions at the five-digit level across most sectors. The sixth digit facilitates the adding of country-specific details.

The corresponding table lists some of the economic sector codes from NAICS 2017.

11 - Agriculture, forestry, fishing and hunting

21 - Mining, quarrying, and oil and gas extraction

22 - Utilities

23 - Construction

31-33 - Manufacturing

44-45 - Retail trade

48-49 - Transportation and warehousing

52 - Finance and insurance

53 - Real estate and rental and leasing

55 - Management of companies and enterprises

56 - Administrative and support and waste management and remediation services

61 - Educational services

62 - Health care and social assistance

71 - Arts, entertainment, and recreation

72 - Accommodation and food services

Organization in Charge of NAICS

The United States Census Bureau is responsible for maintaining and providing all data, reference files, and tools that are relevant to NAICS. Other American participating agencies include the Energy Information Administration, the Department of Agriculture, the Federal Emergency Management Administration, and the Bureau of Transportation Statistics.

History of NAICS

NAICS replaced the Standard Industrial Classification (SIC) system in 1997. It was developed through collaboration between the U.S. Economic Classification Policy Committee (ECPC), Mexico’s National Institute of Statistics and Geography (INEGI), and Statistics Canada. The U.S. Office of Management and Budget (OMB) provided guidance and direction.

The aim of creating NAICS was to give the three countries common industry-specific definitions. NAICS revisions have been published in 2002, 2007, 2012, and 2017.

Example Codes

Take these NAICS codes into consideration:

  • 236115
  • 236116
  • 236117  

The first two digits (23) identify the economic sector (Construction).

The third digit (6) denotes the subsector (Construction of buildings).

The fourth digit (1) represents the industry group (Residential building construction).

Along with the fifth and sixth digits representing the NAICS industry and the national industry respectively, the examples in question stand for:

  • 236115 – New single-family housing construction (except for-sale builders)
  • 236116 – New multifamily housing construction (except for-sale builders)
  • 236117 – New housing for-sale builders