New Sectors in NAICS

NAICS groups the economy into 20 broad sectors, up from the 10 divisions of the SIC system.

Code NAICS Sectors

11 Agriculture, Forestry, Fishing and Hunting

21 Mining

22 Utilities

23 Construction

31-33 Manufacturing

42 Wholesale Trade

44-45 Retail Trade

48-49 Transportation and Warehousing

51 Information

52 Finance and Insurance

53 Real Estate and Rental and Leasing

54 Professional, Scientific, and Technical Services

55 Management of Companies and Enterprises

56 Administrative and Support and Waste Management and Remediation Services

61 Education Services

62 Health Care and Social Assistance

71 Arts, Entertainment, and Recreation

72 Accommodation and Food Services

81 Other Services (except Public Administration)

92 Public Administration

Many of the new sectors reflect recognizable parts of SIC divisions, such as the Utilities and Transportation sectors, broken out from the SIC division Transportation, Communications, and Utilities. Similarly, the SIC division for Service Industries has been subdivided to form several new sectors, as shown in the chart below.

Other sectors represent combinations of pieces from more than one SIC division. The new Information sector includes major components from Transportation, Communications, and Utilities (broadcasting and telecommunications), Manufacturing (publishing), and Services Industries (software publishing, data processing, information services, motion picture and sound recording). The Accommodation and Foodservices sector puts together hotels and other lodging places from Service Industries and eating and drinking places from Retail Trade.

The chart below shows the NAICS sectors and the SIC divisions from which their primary components were derived. Text linked from the chart discusses the makeup of the new sectors in greater detail.

Code NAICS Sectors SIC Divisions

11 Agriculture, Forestry, Fishing, and Hunting Agriculture, Forestry, and Fishing

21 Mining Mining

23 Construction Construction

31-33 Manufacturing Manufacturing

22 Utilities Transportation, Communications and Public Utilities

48-49 Transportation and Warehousing

42 Wholesale Trade Wholesale Trade

44-45 Retail Trade Retail Trade

72 Accommodation and Food Services

52 Finance and Insurance Finance, Insurance, and Real Estate

53 Real Estate and Rental and Leasing

51 Information Services

54 Professional, Scientific, and Technical Services

56 Administrative Support; Waste Management and Remediation Services

61 Educational Services

62 Health Care and Social Assistance

71 Arts, Entertainment, and Recreation

81 Other Services (except Public Adminsitration)

92 Public Administration Public Administration

55 Management of Companies and Enterprises (parts of all divisions)

IMPORTANT CHANGES BY SECTOR

Manufacturing

The Manufacturing sector is reorganized and resequenced to achieve comparability with Canada and Mexico. Seventy-nine new industries are recognized and another 186 are revised. In all, there are 474 NAICS industries in manufacturing as compared with 459 in the 1987 SIC. The most significant change to manufacturing is the creation of the Computer and Electronic Product Manufacturing subsector. This new subsector brings together those establishments engaged in the production of computers, computer peripherals, communications equipment, similar electronic products, and the components for such products. The subsector was created because of the economic significance these industries have obtained, because their rapid growth suggests that the products of these industries will become even more important to the economies of the North American countries, and because the production processes of the establishments in these industries are fundamentally different from the production processes for other machinery and equipment.

A number of important activities have been moved out of manufacturing while other activities have moved in. Publishing has moved to the new Information sector and logging to Agriculture, Forestry, and Fishing. Coming into manufacturing are bakeries that bake on the premise and custom manufacturing.

Retail and Wholesale Trade

NAICS redefines the boundaries between Retail and Wholesale Trade. The new NAICS definition emphasizes what the establishment does, rather than to whom it sells. Retailers are defined as those establishments that sell merchandise, generally without transformation, and attract customers using methods such as advertising, point-of-sale location, and display of merchandise. A store retailer has a selling place open to the public; merchandise on display or available through sales clerks; facilities for making cash or credit card transactions; and services provided to retail customers.

Wholesale establishments, on the other hand, are primarily engaged in selling or arranging the purchase or sale of: (a) goods for resale, (b) capital or durable nonconsumer goods, and (c) raw and intermediate materials and supplies used in production. Wholesalers normally operate from a warehouse or office and are characterized by having little or no display of merchandise. In addition, neither the design nor the location of the premises is intended to solicit walk-in traffic. Wholesalers also do not normally use advertising directed to the general public.

The 1987 SIC defined retailers as those establishments that sold primarily to consumers while wholesalers were those establishments that sold primarily to business customers. The distinction between the boundaries of the two SIC divisions was based on class of customer rather than the selling characteristics of the establishment. It is estimated that seven percent of computer wholesalers; 22 percent of office supply wholesalers; 35 percent of farm supply wholesalers; and 57 percent of petroleum bulk stations will move to retail.

Another major change to the retail trade sector is the removal of restaurants from retail trade. Restaurants are combined with accommodations to form a new sector in NAICS, Accommodation and Foodservices. Restaurants accounted for about 10 percent of retail trade as defined by the 1987 SIC.

Information

Perhaps the most important change in NAICS is the recognition of a new Information sector. This new sector includes those establishments that create, disseminate, or provide the means to distribute information. It also includes establishments that provide data processing services. Industries included in this new sector are newspaper, book, and periodical publishers, previously included in the manufacturing sector in the SIC; software publishers, previously included in services; broadcasting and telecommunications producers and distributors, previously included with utilities and transportation; and motion picture and sound recording industries, information services, and data processing services, previously included in services.

There are 34 industries included in this new subsector, 20 of which are new. Some of the new industries include paging, cellular and other wireless telecommunications, and satellite telecommunications.

Finance and Insurance

This new sector recognizes the important and dynamic changes occurring in the U.S. financial sector. Real estate--part of this grouping in the SIC--was moved to a new sector called Real Estate and Rental and Leasing. Deregulation and the constantly changing structure of financial industries made it difficult to construct a system among the three countries. Therefore, agreement with Mexico for this sector reaches only to the 3-digit level (subsector) for finance and 4-digit level (industry group) for insurance. However, Canada and the United States reached agreement down to the 5-digit level.

Real Estate and Rental and Leasing

This sector includes industries from Services; Finance, Insurance, and Real Estate; and Transportation, Communications, and Public Utilities

Professional, Scientific, and Technical Services

Those businesses whose major input is human capital are grouped together in this new sector. The industries within this sector are each defined by the expertise and training of the service provider. The sector includes such industries as offices of lawyers, engineering services, architectural services, advertising services, veterinary services, advertising services, and interior design services. Forty-seven industries are grouped in this sector, 28 of which are new.

Administrative and Support; Waste Management and Remediation Services

This sector includes industries from Services; Transportation, Communications, and Utilities; Construction; and Agriculture, Forestry, and Fishing

Educational Services

Health and Social Assistance

This new sector recognizes that it is sometimes difficult to distinguish between the boundaries of health care and social assistance; therefore, NAICS groups these industries together in a new Health and Social Assistance sector. The industries are grouped in order from those providing the most intensive type of health care to those providing minimal health care with social assistance to those providing only social assistance.

There are 39 industries in this new sector, 27 of which are new. Some of the new industries include HMO Medical Centers, Family Planning Centers, Blood and Organ Banks, Diagnostic Imaging Centers, Continuing Care Retirement Communities, and Community Food Services. The sector also includes ambulance services transfered from Transportation, Communications, and Public Utilities.

Accommodation and Food Services

This sector includes lodging from Services and food services from Retail Trade

Arts, Entertainment, and Recreation

Those businesses engaged in meeting the cultural, entertainment, and recreational interests of their patrons are grouped together in this new sector. Casinos and other gambling businesses are recognized for the first time in NAICS, as are historical sites and sports teams and clubs. In all, there are 25 industries in the sector, most of which are new -- 19 in all. While most of the industries in the sector come from the SIC Services division, others come from Retail Trade and Finance, Insurance, and Real Estate.

Other Services

This sector includes industries from Services; Agriculture, Forestry, and Fishing; Manufacturing; and Finance, Insurance, and Real Estate

Auxiliary Establishments

Auxiliary establishments are those establishments that primarily produce support services for other establishments of the enterprise. Generally, these support services are not intended for use outside of the enterprise. In NAICS, these establishments are classified according to the establishment's primary activity. For example, an establishment providing data processing services for an enterprise is classified in NAICS 51421, Data Processing Services. An establishment that is the head office of an enterprise is classified in the new NAICS industry 551113, Corporate, Subsidiary, and Regional Managing Offices. In the 1987 SIC, each of these establishments was classified according to the primary activity of the establishment for which the support activity was performed. In the above examples, if those support units primarily served an automobile making plant, the support establishment was classified in automobile manufacturing.

The SIC, however, treated the production of goods for other establishments of the same enterprise differently. If a manufacturing establishment produced goods for use within the enterprise, the manufacturing establishment was classified according to its primary activity, not the primary activity of the establishment it served. This different treatment of service producing versus manufacturing auxiliary establishments was inconsistent and NAICS recognized this inconsistency. NAICS classifies auxiliary establishments based on what they do, not on whom they serve. The production oriented concept of NAICS mandated this change.

This change will result in significant shifts in employment data. In 1992, Census data showed over 1,000,000 auxiliary employees assigned to manufacturing and over 840,000 auxiliary employees assigned to retail trade. These employees are most likely to move to either the Management of Companies and Enterprises sector; the Warehousing and Storage subsector; the Computer Systems Design and Related Services subsector; the Accounting, Tax Preparation, Bookkeeping and Payroll Services subsector; or some other services-related subsector. For the 1997 Economic Census, these auxiliary establishments will be dual coded by primary activity and by whom they serve. The data will be shown separately to provide data users with the necessary links to prior information.

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U.S. Census Bureau, last updated 3/6/98