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Conversion to North American Industry Classification System (NAICS)

Beginning with the September 18, 2003 news release, industry labor productivity data reflect the conversion to the North American Industry Classification System (NAICS), which replaces the Standard Industrial Classification (SIC) system as the basis for assigning and tabulating data by industry. Due to differences in NAICS and SIC structures, NAICS-based industry productivity data are not comparable to the SIC-based data.

The NAICS classification system is the product of a cooperative effort on the part of the statistical agencies of the United States, Canada, and Mexico. The NAICS differs from the SIC in that it uses a consistent, production-oriented approach to categorize economic units, focusing on how products and services are created rather than on what is produced; the SIC was less unified in its approach. The structure of the NAICS system is also different from that of the SIC, with a greater emphasis on emerging industries and service-producing industries. Under NAICS, some detailed industries that existed under the SIC were collapsed or combined with other industries, while other new industries were added. Treatment of auxiliaries also changed under NAICS: NAICS classifies auxiliary units involved in activities such as transportation and warehousing; accounting, bookkeeping, and payroll services; and general management into specialized industries rather than including them in the manufacturing, trade, or service industries they support (as in the SIC). As a result of these changes, many of the NAICS industries are significantly different from those in the SIC system.

Industry output indexes are prepared from basic data published by various public and private agencies, using the greatest level of detail available. Data from the Bureau of the Census, U.S. Department of Commerce, are used extensively in developing output series for manufacturing, trade, and service-producing industries, as well as in developing compensation and unit labor cost series for manufacturing industries. Census Bureau data for years prior to 1997 were classified according to the Standard Industrial Classification (SIC) system. The 1997 Economic Censuses provided data on a NAICS basis, and data classified according to NAICS began to be provided in subsequent Annual Survey reports beginning in 1998 or 1999. Some data for wholesale and retail trade industries have been made available by the Census Bureau on a NAICS basis back to 1992.

The 1997 Economic Census questionnaires were designed to permit the classification of each establishment according to both NAICS and SIC. As a result, the Census Bureau tabulated and published 1997 Census data on both a NAICS and SIC basis. The Bureau of Labor Statistics used these dual-coded data to calculate conversion ratios relating NAICS values to SIC values, and the ratios were used to convert data on receipts, value of shipments, inventories and labor compensation for SIC-based industries to estimates for NAICS-based industries for years prior to 1997.

The labor input series used in the industry productivity measures are based primarily on employment and average weekly hours data from the Bureau’s Current Employment Statistics (CES) survey and the Current Population Survey (CPS). Other sources are the Association of American Railroads, the Department of Transportation, and the U.S. Postal Service. The CES data were published on a 2002 NAICS basis with the release of May 2003 data in June 2003. CES series are available back to 1990 for all industries maintained by that program, and for years prior to 1990 for some industries. CES NAICS industry employment and average weekly hours series not available before 1990 were extended back to 1987 by the industry productivity staff with data estimated using conversion ratios derived from dual-coded, first-quarter 2001 data from the Quarterly Census of Employment and Wages (QCEW). These ratios were also used to convert QCEW historical annual industry wages from SIC to NAICS for use in the compensation and unit labor cost measures for some non-manufacturing industries.

Visit the BLS NAICS webpage for more information about implementing NAICS at BLS.