What is Standard Industrial Classification (SIC)?
The Standard Industrial Classification (SIC) is a system used to classify industries by a four-digit code. Established in the United States in 1937, the SIC system was designed to promote uniformity and comparability in the presentation of statistical data related to the U.S. economy. It categorizes industries based on their primary business activities, providing a standardized framework for analyzing economic data.
Purpose of SIC Codes
SIC codes serve several important purposes:
- Data Collection and Analysis: Facilitate the collection, analysis, and comparison of economic data across different industries.
- Regulatory Compliance: Used by government agencies to enforce regulations and monitor industry-specific compliance requirements.
- Market Research: Assist businesses and researchers in conducting market analysis and identifying industry trends.
- Contracting and Procurement: Help in identifying potential suppliers and partners by industry classification.
Structure of SIC Codes
SIC codes are composed of four digits:
- First Two Digits: Represent the major industry group.
- Third Digit: Identifies the industry group within the major group.
- Fourth Digit: Specifies the specific industry or activity.
For example, a SIC code of 3571 refers to “Electronic Computers,” where “35” represents the “Industrial and Commercial Machinery and Computer Equipment” major group, “7” indicates the “Computer and Office Equipment” industry group, and “1” specifies the “Electronic Computers” industry.
Transition to NAICS
While the SIC system was widely used for many decades, it has largely been replaced by the North American Industry Classification System (NAICS) in the United States, Canada, and Mexico. NAICS provides more detailed and updated industry classifications, reflecting changes in the economy and technology.
