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Chart Book (6th edition): Industry Summary - Industrial Classification
1. Industrial Classification
The North American Industry Classification System (NAICS) is the standard to classify business establishments (see Glossary) for data collecting, analyzing, and publishing in North America.1 NAICS was jointly developed by Canada, Mexico, and the U.S. to facilitate direct comparisons of economic data across borders in North America. NAICS replaced the Standard Industrial Classification (SIC) system in 1997, and is revised periodically to reflect changes in the industrial structure of the U.S. and North American economies.2 Revisions in NAICS reflect the addition of new and emerging industries, and give special attention to the service industry and industries engaged in the production of advanced technologies. The 2002 NAICS had substantial revisions in construction industry classifications compared to the 1997 NAICS. As a result, construction data from previous years may not be comparable, particularly at the subsector level. Since 2002, the NAICS classifications have remained similar for the construction industry, albeit with minor changes in the 2012 NAICS.1,3 The 2017 NAICS is available since January 2017.3
NAICS is based solely on production processes and classifies each establishment into a detailed industry according to the production processes it uses. Using a six-digit classification system, NAICS allows great flexibility in the coding structure (chart 1a). The first two digits of the six-digit hierarchical coding system designate the highest level groupings among major industry sectors. For example, the construction industry is coded as 23, and each subsequent digit makes the code more specialized (chart 1a). The sixth digit of the NAICS code allows each country to recognize its own, possibly unique, industries in more detail. Therefore, comparisons between the U.S., Canada, and Mexico can be made at the five-digit level, but not at the six-digit level. In the U.S., Residential Building Construction (NAICS 23611, charts 1a and 1b) at the six-digit level is composed of four subsectors (chart 1a). Similarly, for Specialty Trade Contractors (NAICS 238; charts 1a and 1b), the sixth digit of the NAICS codes in the U.S. assigns “1” for residential and “2” for nonresidential (chart 1a).
While NAICS is widely adopted by major data agencies in the U.S., data from household surveys (data collected from individual respondents) are coded by the U.S. Census Bureau’s Industry Classification System. For example, the construction industry is coded as 0770 by the Census coding system, corresponding to NAICS 23. Unlike NAICS, the Census classifications do not assign codes for construction subsectors (e.g., residential or nonresidential construction). Therefore in this Chart Book, construction subsector information is unavailable for analyses based on household survey data (see pages 10, 12, 15, 21).
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Establishment - From the Economic Census: a single physical location, where business is conducted and services or industrial operations are performed. An establishment is classified to an industry when its primary activity meets the definition for that industry. In construction, the individual sites, projects, fields, lines, or systems of such dispersed activities are not considered to be establishments. The establishment in construction is represented by a relatively permanent main or branch office that is either 1) directly responsible for supervising such activities, or 2) the base from which personnel operate to carry out these activities.
1. U.S. Census Bureau. 2016. North American Industry Classification System. https://www.census.gov/eos/www/naics/history/history.html (Accessed December 2016).
2. U.S. Bureau of Labor Statistics. 2016. North American Industry Classification System (NAICS) at BLS. https://www.bls.gov/bls/naics.htm (Accessed December 2016).
3. Office of Management and Budget. 2016. North American Industry Classification System—Revision for 2017; Notice. Federal Register, 81(152). https://www.census.gov/eos/www/naics/federal_register_notices/notices/fr08au16.pdf (Accessed January 2017).
Chart 1b – Asterisk (*) indicates the classification changed in NAICS 2012.
Chart 1a – U.S. Census Bureau. 2016. North American Industry Classification System. http://www.census.gov/eos/www/naics/ (Accessed January 2017). U.S. Bureau of Labor Statistics, BLS NAICS 2012 Search. https://www.bls.gov/cew/bls_naics/bls_naics_app.htm (Accessed January 2017).
Chart 1b – U.S. Census Bureau. 2016. North American Industry Classification System. http://www.census.gov/eos/www/naics/ (Accessed January 2017).
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