The North American Industry Classification System (NAICS) is a standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. It is a classification system that assigns a unique code to each business establishment based on its primary economic activity. The NAICS system was developed jointly by the U.S. Economic Classification Policy Committee (ECPC), Statistics Canada, and Mexicos Instituto Nacional de Estadistica y Geografia, to allow for a high level of comparability in business statistics among the North American countries.
NAICS uses a six-digit hierarchical coding system to classify all economic activity into twenty industry sectors. The organization of NAICS is as follows:
-
Sector: The broadest level of classification, there are twenty sectors included in the NAICS. All sectors, except 92, have full or part representation in the economic census.
-
Subsector: The second level of classification, each sector is divided into subsectors.
-
Industry Group: The third level of classification, each subsector is divided into industry groups.
-
NAICS Industry: The fourth level of classification, each industry group is divided into NAICS industries.
-
National Industry: The fifth level of classification, each NAICS industry is divided into national industries.
A NAICS code is a classification within the North American Industry Classification System. It is a self-assigned system, meaning that a company selects the code that best depicts their primary business activity and then uses it when asked for their code. Companies also rely on the NAICS code to classify their own customers by industry. Many target their marketing efforts to businesses within a particular NAICS code. NAICS codes allow them to focus their targeted marketing efforts on companies in similar or identical industries.
