Revising the North American Industry Classification (NAICS) Canada 2022 Version 1.0 to NAICS Canada 2027 Version 1.0

Spring 2026

Introduction

This report follows the release in March 2026 of the What We Heard report which documents the results from the consultation process initiated in August 2023 concerning proposals for changes to the North American Industry Classification System (NAICS) Canada. It summarily describes the changes to the upcoming NAICS Canada 2027 version 1.0 set for release in January 2027. All of the proposals received through the consultation process were treated according to generally accepted statistical classification principles and the criteria outlined in the consultation poster.

Background

NAICS represents a continuing co-operative effort among Statistics Canada, Mexico's Instituto Nacional de Estadística y Geografía (INEGI), and the Economic Classification Policy Committee (ECPC) of the United States, acting on behalf of the Office of Management and Budget, to create and maintain a common industry classification system. The countries collaborate to produce revisions to NAICS on a five-year cycle in order to keep the classification up-to-date with current economic activities.

The purpose of NAICS is primarily to provide a standardized framework for the classification, data production and analysis of the economy. It has been designed to provide common definitions of the industrial structure of the three countries and a common statistical framework to facilitate the analysis of the three economies. It is a comprehensive system encompassing all economic activities.

The structure of NAICS is hierarchical. The numbering system that has been adopted is a six-digit code, of which the first five digits are used to describe the NAICS levels that will be used by the three countries to produce comparable data. The first two digits designate the sector, the third digit designates the subsector, the fourth digit designates the industry group and the fifth digit designates the industry. The sixth digit is used to designate national industries. A zero as the sixth digit indicates that there is no further national detail.

NAICS agreements define the boundaries of the twenty sectors into which the classification divides the economies of the three countries. Although, typically, agreement has been reached that comparable data will be made available for Canada, Mexico and the United States up to the five-digit industry level of NAICS, differences in the organization of production in the economies of the three countries necessitated certain exceptions. For some sectors, subsectors and industry groups, three-country agreement was reached only on their boundaries rather than on detailed industry structures.

Revising NAICS Canada to 2027 Version 1.0

In line with good statistical classification practice, NAICS Canada is revised on a five-year cycle to reflect changes in the Canadian economy, ensuring continued relevance and accuracy. NAICS updates include two types of revisions – "real changes" and "virtual changes". While "real changes" affect the scope of classification items and/or categories, and therefore impact the data collected and disseminated, "virtual changes" are meant only to capture codes and title changes or to clarify the description of existing categories, with no impact on the scope of those categories.

Statistics Canada's Economic Standards Steering Committee (ESSC) approved a permanent consultation process for NAICS Canada on April 28, 2023. Proposals for changes can now be submitted and reviewed on an ongoing basis. A cut-off date of June 30, 2025 was set for considering proposed changes for inclusion in NAICS Canada 2027 and included in the invitation on proposals poster.

Summary of proposed changes by economic sector

As outlined in the What We Heard report, feedback from the consultation process included both virtual (text) and real (structural) changes from both internal and external stakeholders. These proposed revisions reflect the evolution of existing industries and the emergence of new ones. NAICS at the two-digit level represents the sector level, which is the highest level of the economy. There are 20 sectors in NAICS Canada and they are numbered from 11 to 91.

What we did

Following good classification practice, all changes that are implemented in Statistics Canada classifications are guided by sound principles and concepts^Footnote1 and aligned with the General Statistical Information Model (GSIM)^Footnote2. These principles form the foundation for developing, implementing, and revising statistical classifications.

Stakeholder and public recommendations were assessed using the same rigorous standards. To support a thorough evaluation, where necessary, the NAICS Canada team and trilateral steering committee requested detailed information demonstrating alignment with the key classification principles. While changes were typically drafted to minimize disruption to existing classification structures, disruptive changes were implemented when justified to maintain the integrity and relevance of the classification.

This approach applies to:

• revising existing industries
• creation of new industries
• movement or placement of activities within the classification structure
• general content updates

The NAICS Canada team reviewed stakeholder submissions and conducted follow-up meetings when additional information was required or requested. Revisions to NAICS Canada for 2027 reflect the collaborative efforts and insights of stakeholders, the trilateral steering committee, and Statistics Canada subject matter experts to ensure the classification remains relevant and responsive to user needs and accurately represents the evolving Canadian economy.

What is expected to change in NAICS Canada 2027

Certain aspects of the classification were revised to reflect new and emerging activities in the economy. Practical changes were made to wording, for instance to help  users with self-coding  so they can easily locate their business activities in the classification for reporting purposes. As well, certain activities that have increased in importance and gained a larger revenue share of their industry have been included as separate industries or activities.

In particular:

• modifications were made to improve coherence with observed data trends, though some potential refinements were not feasible due to limitations in data availability at more detailed levels.
• the classification was adjusted where possible, balancing analytical needs with the constraints of data reporting.
• updates reflect a compromise between ideal classification structure and practical reporting limitations, particularly where finer breakdowns would compromise data reliability or confidentiality.

Although most changes occur at the 6-digit level (national industry) of NAICS Canada – the most detailed level of the classification – updates at this level also affect higher levels of the classification. A full overview of changes across all levels will be available in the NAICS Canada 2022 V1.0 to NAICS Canada 2027 V1.0 correspondence table, to be released in early 2027.

Real (structural) changes:

Industries added:

• electric power generation (solar, wind, biomass and other)
• electrical vehicle battery manufacturing
• electric power storage systems
• residential property associations
• short term rentals
• workforce accommodation

Industries taken over by or merged with existing industries:

• asbestos mining
• one-hour photofinishing
• motels and motor hotels
• business and secretarial schools
• office furniture manufacturing
• communications equipment manufacturing

Virtual (content-only) changes:

Virtual changes aimed at improving clarity and maintaining relevancy. These updates included:

• revised titles and/or definitions
• new or revised examples
• updates to definitions, inclusions and exclusions

Virtual changes affecting most Sectors:

• Improved industry descriptions and titles
  • Example: the industry title and description of childcare services has been updated to reflect more modern terminology used in this area as it had previously been outdated.
• Addition of example activities
  • Example: new example activities related to advanced and new technologies for power generation such as nuclear, solar, wind and geothermal technologies have been added, as well as to the bioeconomy.
• Revised sector definitions
  • Example: definitions of the Manufacturing and Retail trade sectors and the Repair and maintenance sub-sector have been revised to add more detail and precision. The Advertising industry definition has also been updated to reflect the increasing technological nature of the industry.
• Clarification and update of exclusions
  • Example: the delivery of different types of food has been added as exclusions to add clarity and distinguish similar activities, as depending on the degree of preparation and how and where food is sold, the activities associated with food delivery are classified to different industries. For instance, food sold at farmer's markets, farm direct bundles, prepared food subscriptions, meal kits and grocery delivery are all distinguished in the classification through the use of exclusions as they belong to different industries.

Other considerations

During the revision process of a statistical classification such as NAICS, it is possible that some proposals do not end up as changes in the classification; this doesn't mean they were not important, as all proposals are considered during the review process. However, some submissions do not meet the criteria for changes (empirical significance, analytical interest, change in scope of the existing classification item, among other considerations) or adhere to the classification principles (such as mutual exclusivity, exhaustiveness, and homogeneity within categories) established in the consultation notice.

Examples of such cases are:

• proposals were received, including one introduced very close to the deadline, for an extensive review and restructuring of NAICS Canada Sector 52 - Finance and insurance. After a careful review, it was decided to move the treatment of the issues to the research agenda for the next revision of the classification.
• a proposal to update transportation industries based on specific policy reporting requirements. This did not adhere to NAICS principles and revision criteria for NAICS Canada 2027.
• need to review NAICS Canada subsector 518—Computing infrastructure providers, data processing, web hosting, and related services—was raised due to rapidly evolving economic activities in data centres, particularly their growing role in AI, cloud computing, and edge computing. This topic was not discussed during the trilateral meetings, and research for the Canadian context is only beginning. Additional consultations will be required before proposing any specific NAICS changes. Given the limited time remaining for the 2027 cycle, the review of subsector 518 has been deferred and added to the research agenda for the next revision of the classification.

Appendix: Governing principles and underlying concepts and criteria

Statistical classification principles

Principle 1: Follow internationally accepted definitions and guidelines on how to classify activities and industries as statistical units (also see North American Industry Classification - Introduction). Because the purpose of NAICS is primarily to provide a framework to support consistent statistical information on Canadian economic activities, it is important to specify the scope of each category in the classification. By following standard definitions and coding practices, Principle 1 support consistent and sound statistics to be produced and disseminated. The NAICS team uses this information to evaluate whether proposed changes are properly placed in the classification structure.

Principle 2: Respect of the internationally recognized statistical classification principles, being:

• well defined universe: categories at each level of the classification structure must reflect a well-defined universe or scope;
• classification is exhaustive: it covers all possible elements in the universe even if all examples of such universe are not provided in the publication;
• categories are mutually exclusive: no overlapping in the scope of each classification item or category (to avoid double counting);
• classification structure is hierarchical: lower categories are dependent of their higher categories;
• classification structure is rectangular: the classification has a code represented at every level across its whole structure, regardless of the scope of each category;
• classification is comparable to other classifications of the same domain (e.g. industry);
• classification categories are empirically significant;
• classification is organized around one or few concepts (e.g., activities; industries);
• classification contains groupings meaningful to users;
• classification is widely adopted.

Principle 3: The classification is related to data that is collectible and publishable (collectability and reportability).

For NAICS, this means whether data can be collected and reported on an industry basis.

For a detailed industry to be included in NAICS and expecting statistics to come out of it, Statistics Canada must be able to collect and report data, otherwise, categories will not provide opportunities to produce relevant statistics. Statistics Canada is responsible for producing data across the entire range of industries in Canada and conducts comprehensive surveys that collect industry level data.

Collectability and reportability are partly a function of the size of the industry and other measures of empirical significance (meaning the industries must be large enough to be detected in sample of surveys). In evaluating collectability and reportability, however, the NAICS team will not use a specific industry size cut-off. This is because industries that are concentrated in certain sectors or geographic areas may be collectable and reportable, while industries of a similar or larger size that are spread throughout the economy may not be collectable and reportable. Therefore, size is not the only consideration in collectability and reportability. Collectability and reportability are also related to the type of data collection used by surveys or statistical programs.

Principle 4: The classification supports the maintenance of time series continuity to the extent possible; that is, the ability to maintain data series over time without interruption due to classification changes. To the extent possible, new industry categories proposed for the current version of NAICS and beyond should be easily linked by appropriate correspondence to previous version NAICS (e.g., NAICS 2022 to NAICS 2017 v3 and NAICS 2017 v2 to NAICS 2017 v1).

Guidelines developed by Statistics Canada provided for the launch of the permanent consultation process for NAICS will assist users and the NAICS team in consistently making changes to the classification.

Principle 5: The classification continues to be relevant, that is, it must be of analytical interest, result in data that is useful to users, and be based on appropriate statistical research, subject-matter expertise and administrative relevance aligned with statistical classification principles and needs.

Principle 6: The prevalence of classification principles and statistical needs.

For NAICS, this means that it is designed primarily for statistical purposes. Although there can be various uses of NAICS for non-statistical purposes (e.g., for administrative, regulatory, or policy functions), the requirements of government agencies or private users that choose to use NAICS for non-statistical purposes are responsible for such use of the classification. As a result, the NAICS team reviews comments and develops its recommendations based on established statistical classification principles and guidelines. Information provided unrelated to the accurate gathering of information for statistical purposes, such as perceived importance or visibility of an industry, does not determine the NAICS team recommendations. Similarly, the volume of comments does not determine what the recommendations will be, and just submitting a request for a change does not automatically result into a change in NAICS.

Underlying concepts and classification criteria of NAICS

Establishment-based classification

NAICS is designed for the compilation of production statistics and, therefore, for the classification of data relating to establishments. It takes into account the specialization of activities generally found at the level of the producing units of businesses. The criteria used to group establishments into industries in NAICS are similarity of input structures, labour skills and production processes.

NAICS can also be used for classifying companies and enterprises. However, when NAICS is used in this way, the following caveat applies: NAICS has not been specially designed to take account of the wide range of vertically- or horizontally-integrated activities of large and complex, multi-establishment companies and enterprises. Hence, there will be a few large and complex companies and enterprises whose activities may be spread over the different sectors of NAICS, in such a way that classifying them to one sector will misrepresent the range of their activities. However, in general, a larger proportion of the activities of each complex company and enterprise is more likely to fall within the sector, subsector and industry group levels of the classification than within the industry levels. Hence, the higher levels of the classification are more suitable for the classification of companies and enterprises than are the lower levels. It should also be kept in mind that when businesses are composed of establishments belonging to different NAICS industries, their company- and enterprise-level data will show a different industrial distribution, when classified to NAICS, than will their establishment-level data, and the data will not be directly comparable.

While NAICS is designed for the classification of units engaged in market and non-market production, as defined by the System of National Accounts, it can also be used to classify own-account production, such as the unpaid work of households.

Unit of observation

The unit of observation of the industrial classification is the producing unit or establishment, and the industrial classification groups producing units, not products. Groupings of producing units permit the collection of data on inputs and outputs on a comparable basis. Because establishments each produce a number of products in different combinations and using different technologies, it is hardly possible to group all the establishments producing a particular product. It is more useful to use a production-oriented approach to bring together, into industries, establishments with common input structures, and to compile data on their outputs. This permits the compilation of comprehensive data on the total output of each product by industry and across all industries.

Statistical purposes

NAICS has been designed for statistical purposes. Government departments and agencies and other users that use it for administrative, legislative and other non-statistical purposes take responsibility for applying the classification in this manner.

NAICS is based on a production-oriented, or supply-based conceptual framework in that establishments are grouped into industries according to similarity in the production processes used to produce goods and services. The production process refers to the combination of inputs used in producing a certain quantity of outputs. A production-oriented industry classification system ensures that statistical agencies in the three countries can produce information on inputs and outputs, industrial performance, productivity, unit labour costs, employment, and other statistics that reflect structural changes occurring in the three economies.

Producing units are grouped into industries according to similarities in their production processes as defined earlier. The boundaries between industries demarcate, in principle, differences in input structures and production technologies. This means that, in the language of economics, producing units within an industry have similar production functions that differ from those of producing units in other industries.