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:
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
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.
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.
Take these NAICS codes into consideration:
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: