Standard Industrial Classification
Standard Industrial Classification (SIC) codes are four-digit numerical codes assigned by the U.S. government that categorize the industries to which companies belong, while also organizing industries by their business activities. The SIC codes were created by the U.S. government in 1937 to classify and analyze economic activity across various industries and government agencies, and to promote uniformity in the presentation of statistical data collected by various government agencies SIC codes have also been adopted in places outside the U.S., including in the U.K.However, Standard Industrial Classification codes were mostly replaced in 1997 by a system of six-digit codes called the North American Industry Classification System (NAICS). The NAICS codes were adopted in part to standardize industry data collection and analysis between Canada, the United States, and Mexico, which had entered into the North American Free Trade Agreement.Despite having been replaced, government agencies and companies still use the SIC standardized codes today for classifying the industry that companies belong to by matching their business activity with like companies.
Definition:
The Standard Industrial Classification (SIC) code is a four-digit code assigned by the U.S. government to classify industries based on their business activities.
Origin:
The SIC code system was created by the U.S. government in 1937 to classify and analyze economic activities of various industries and government agencies, and to standardize the presentation of statistical data collected by different government bodies. Although largely replaced by the North American Industry Classification System (NAICS) in 1997, SIC codes are still used by some government agencies and companies.
Categories and Characteristics:
The SIC code system divides economic activities into several major categories, each of which is further subdivided into smaller categories, represented by a four-digit code. For example, manufacturing might be divided into food manufacturing, textile manufacturing, etc. The SIC code system is characterized by its simplicity and ease of use, but its classifications are relatively coarse and may not reflect the complexity of modern economic activities.
Specific Cases:
1. A food manufacturing company might be assigned an SIC code in the range of 2000-2099, which covers the production of food and beverages.
2. A software development company might be assigned the SIC code 7371, which is specifically for computer programming services.
Common Questions:
1. Why was the SIC code replaced by NAICS?
The NAICS code system provides more detailed and modern classifications, meeting the needs of the North American Free Trade Agreement.
2. Is it still necessary to understand SIC codes today?
Although NAICS is more prevalent, some government agencies and companies still use SIC codes, so understanding them is still useful.
