Finance

Industry designation codes are used to describe the industry (or industries) in which a business operates. They are used in standardized classification systems, which are usually created and maintained by a government or international body. 

NAICS and SIC are industry designation codes used in the United States. They are used to retrieve information from the US Census Bureau, Bureau of Labor Statistics, and other major federal government entities, as well as many professional and academic research databases.

• North American Industry Classification System (NAICS) was adopted in 1997 and is used jointly by the US, Canada, and Mexico to classify and collect statistical information about businesses
• NAICS replaced the Standard Industry Classification system (SIC), though SIC codes are still available for businesses in the US

The NAICS Structure

Image Source: IBISWorld

NAICS classifies businesses based on their primary economic activity. The system uses a hierarchical coding structure which becomes more specific with each additional digit:

• Sector: 2-digit code
• Subsector: 3-digit code
• Industry Group: 4-digit code
• Industry: 5-digit code
• National Industry: 6-digit code

The Census Bureau documents the full structure of the NAICS code, which was last updated in 2022.