North American Industry Classification System (NAICS)

North American Industry Classification System (NAICS)

The North American Industry Classification System (NAICS) is a standardized system for classifying business establishments across the United States, Canada, and Mexico. It groups companies by similar production processes to enable consistent collection, analysis, and comparison of economic data across North America.

Key points

• NAICS is a tri-national classification system used for statistical and administrative purposes.
• It replaced the older U.S. Standard Industrial Classification (SIC) with a more flexible six-digit structure.
• NAICS codes are reviewed and updated regularly (typically every five years) to reflect changes in the economy.
• The 2022 revision reduced the number of six-digit industries from 1,057 to 1,012 and adjusted size standards affecting several sectors.
• A business’s primary NAICS code is the code for the activity that generated the most revenue at a specific location in the past year.

Why NAICS exists

NAICS was created to modernize and harmonize industry classification across North America. It improves comparability of economic statistics, supports policy and regulatory work, and helps businesses, researchers, and government agencies analyze industry trends and performance.

Who maintains NAICS

NAICS is developed and maintained collaboratively by:
* Instituto Nacional de Estadística y Geografía (INEGI) — Mexico
* Statistics Canada
* U.S. Office of Management and Budget (via its Economic Classification Policy Committee), with staff support from the Bureau of Economic Analysis, the Bureau of Labor Statistics, and the U.S. Census Bureau

Hierarchical structure and code counts

NAICS uses a six-digit hierarchical code structure:
* 2 digits — Sector (20 sectors total)
* 3 digits — Subsector (96 subsectors)
* 4 digits — Industry group (308 groups)
* 5 digits — NAICS industry (689 industries)
* 6 digits — National industry (1,012 industries after the 2022 revision)

Five sectors are primarily goods-producing; the remaining 15 are mainly service-oriented.

How to read a NAICS code

Each digit in a six-digit NAICS code narrows the classification:
* Digits 1–2: broad sector
* Digit 3: subsector
* Digit 4: industry group
* Digit 5: specific industry
* Digit 6: national industry detail

Example: Soybean farming is NAICS 111110
* 11 — Agriculture, Forestry, Fishing and Hunting (sector)
* 111 — Crop Production (subsector)
* 1111 — Oilseed and Grain Farming (industry group)
* 11111 — Soybean Farming (industry)
* 111110 — Soybean farming (national industry code)

Assignment and updates

A company’s primary NAICS code is assigned based on the largest revenue-generating activity at a given location during the prior year. NAICS is reviewed and revised on a regular schedule to reflect technological, organizational, and market changes; stakeholders can propose updates through the official national agencies.

Uses

NAICS codes are widely used for:
* Government statistics and economic analysis
* Tax and regulatory reporting
* Government contracting and procurement
* Market research and industry benchmarking
* Identifying competitors and industry trends

Note: NAICS should not be confused with other similarly named acronyms (for example, NAIC — National Association of Insurance Commissioners).

Sources

U.S. Census Bureau — North American Industry Classification System (NAICS) publications and FAQs
Statistics Canada — NAICS documentation
INEGI (Mexico) — NAICS contributions and publications