North American Industry Classification System (NAICS)
The standard statistical classification system, adopted in 1997 by the United States Office of Management and Budget (OMB), that assigns an industry number to businesses and business units by type of economic activity. The NAICS has been harmonized with and also adopted by Mexico and Canada. It replaces the Standard Industrial Classification (SIC) system used in the U.S. from 1938 until 1997. The NAICS is a standard industry classification system that facilitates the collection, tabulation, presentation, and analysis of data relating to establishments and ensures that data about the U.S. economy published by U.S. statistical agencies are uniform and comparable among the North American countries. The NAICS uses a six-digit numerical coding system to identify particular industries and their placement in the hierarchical structure of the classification system. The first two digits group establishments (or locations at which an economic activity occurs) into one of 20 sectors, such as for example, Agriculture, Mining, Construction, Manufacturing, Wholesale Trade, Retail Trade, and Administration and Support Services. The remaining digits designate one of the 1,170 industries identified in NAICS. When any employer applies for an Employer Identification Number (EIN), information about the type of activity in which that business is engaged is requested in order to assign a NAICS code. In addition, statistical agencies such as the Census Bureau and the Bureau of Labor Statistics assign NAICS codes based on information reported to them. Water treatment equipment manufacturing, for example, is in NAICS 333319, water softener and water conditioning direct selling and service providers are in NAICS 454390, water softening and conditioning equipment wholesaling is in 421720, water softening and conditioning compounds and materials wholesaling is in 422690, and water softening and conditioning support services are in 561990.