Hierarchical Code Granularity
NAICS uses a six-digit hierarchical code where each digit adds specificity:
- 2 digits: Sector (20 categories)
- 3 digits: Subsector
- 4 digits: Industry group
- 5 digits: NAICS industry (tri-national agreement)
- 6 digits: National industry (country-specific detail)
The first five digits are harmonized across the U.S., Canada, and Mexico. The sixth digit allows each country to add detail relevant to their economy without breaking cross-border comparability.
This design embeds a governance model into the code structure itself. International consistency lives at one level; national flexibility at another. You can always roll up to the shared level for cross-border analysis while retaining local granularity.
The pattern: when multiple authorities need to share a classification, agree on a common level of aggregation and allow divergence only below that threshold. The code structure makes the boundary visible and enforceable.