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A Brief Introduction to NAICS Codes

February 9, 2017

In order to generate data that is usable and comparable, Federal agencies use a coding system to classify business establishments. This system is called the North American Industry Classification System (NAICS). NAICS is the 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.


NAICS was adopted in 1997 to replace the Standard Industrial Classification (SIC) system. It was developed jointly by the U.S. Economic Classification Policy Committee, Statistics Canada, and Mexico's Instituto Nacional de Estadistica y Geografia, so that data are comparable between the North American countries.


NAICS codes are between 2 and 6 digits long. The first two digits are the broadest category, and digits that follow offer more and more detail. For example, all the industries with NAICS codes that start with 62 are part of the Health Care and Social Assistance Sector. Within Health Care and Social Assistance, the third digit distinguishes between outpatient settings (621), hospitals (622), nursing facilities (623), and social assistance (624). The fourth digit gives the group. For example, 6211 represents Offices of Physicians and then, the last two digits give the most detailed category. For example, 621112 is Offices of Physicians, Mental Health Specialists – a very particular type of Physician’s office.


When you download industry data from a Bureau of Labor Statistics (BLS) website or any State's Department of Labor site, you’ll find that the more detailed NAICS codes are below their higher-level NAICS. You can confirm this by testing that the data for more detailed NAICS codes will sum to the higher level NAICS code. When you aggregate data, you will need to be very careful not to mix NAICS codes of different levels of detail.


A list of all the NAICS codes can be downloaded from the Bureau of Labor Statistics.

 

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