History

Economic

Classifying Businesses

The Standard Industrial Classification System

In the mid-1930's, the Central Statistical Board of the United States created the Interdepartmental Committee on Industrial Classification, for the purpose of establishing a consistent system of industrial classification. In 1938, the committee approved a list of manufacturing industries. It acknowledged the complication of classifying non-manufacturing industries, but included them on the list. The committee completed its classification system in 1939, and named it the Standard Industrial Classification (SIC).

In 1945, the committee revised and expanded the SIC list of manufacturing industries, reflecting the changing face of U.S. industry following World War II. The SIC for non-manufacturing industries was not updated until 1949. The committee combined manufacturing and non-manufacturing industries into a single book in the 1957 edition of the SIC manual, which they updated regularly through 1987.

Read more:
The History of the Standard Industrial Classification

The North American Industry Classification System

By the early 1990's, weaknesses in the SIC system became apparent. The adoption of the North American Free Trade Agreement (NAFTA) underscored the need not only to develop a new system, but also to develop that system in cooperation with Canada and Mexico. With the three countries so closely linked by trade, data users argued that it would be very useful for their economic data to be easily comparable.

In response to the demand for standardized data, the U.S. Office of Management and Budget (OMB) organized the Economic Classification Policy Committee (ECPC) to develop a new international classification system.

The ECPC, which consisted of representatives from the Census Bureau, the Bureau of Economic Analysis, and the Bureau of Labor Statistics, concentrated on making industrial classifications simpler, easier to interpret, and more inclusive. After establishing criteria for a new system, the ECPC entered into negotiations with Statistics Canada and Mexico's Instituto Nacional de Estadistica, Geografia e Informatica (INEGI), eventually agreeing to develop a common system with these two statistical agencies.

OMB officially adopted the resulting classification scheme, the North American Industry Classification System (NAICS) in 1997. NAICS was first used in that year's economic census. The new classification scheme recognized hundreds of new industries. In 1999, the statistical agencies of Canada, Mexico, and the United States also jointly launched and initiative to develop the North American Product Classification System (NAPCS), a system that will be complementary to NAICS.

To learn more about the history of the North American Industry Classification System click here.

The North American Product Classification System

The North American Product Classification System (NAPCS) is a classification system that organizes goods and services throughout the economy in a systematic fashion.

The development of NAPCS has been a joint project of the national statistical agencies of the United States, Canada, Mexico. Early in the NAICS planning, the three countries recognized the critical need for commodity-based classification and they agreed to work cooperatively to help improve existing commodity classification systems and explore development of a product system in common following NAICS's implementation.

As of the 2007 Economic Census, NAPCS coverage is restricted to service-producing industries in NAICS Sectors 48-49, 51, 52, 53, 54, 55, 56, 61, 62, 71, 72 and 81. In time, NAPCS will become an economy-wide classification system covering both goods and services.

For more information on the NAPCS, click here.

For information about the development of NAPCS, download Developing A Product Classification System for the United States [1.8 MB PDF]