[Federal Register Volume 64, Number 37 (Thursday, February 25, 1999)]
[Notices]
[Pages 9416-9419]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4663]
[[Page 9415]]
_______________________________________________________________________
Part IV
Office of Management and Budget
_______________________________________________________________________
1997 North American Industry Classification System--Completion
Activities for 2002; Notice
Federal Register / Vol. 64, No. 37 / Thursday, February 25, 1999 /
Notices
[[Page 9416]]
OFFICE OF MANAGEMENT AND BUDGET
1997 North American Industry Classification System--Completion
Activities for 2002
AGENCY: Office of Management and Budget, Executive Office of the
President.
ACTION: Notice of intention to complete portions of the North American
Industry Classification System (NAICS) for 2002.
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SUMMARY: Under Title 44 U.S.C. 3504(e), the Office of Management and
Budget (OMB), through the Economic Classification Policy Committee
(ECPC), is seeking public comment (please see Part V of the
Supplementary Information section below) on a proposal to complete
portions of the North American Industry Classification System (NAICS)
for 2002. NAICS was jointly developed by Canada, Mexico, and the United
States. The proposed completion activities will focus on the
Construction and Wholesale Trade sectors of NAICS. Currently, these
sectors are comparable among all three countries only at the highest
levels of aggregation. The ECPC also will consider narrowly defined
Retail Trade issues related to the national industries for department
stores and nonstore retailers as well as specific problems that may be
identified in the implementation of NAICS 1997. It is not the intent of
the ECPC to open for consideration all areas of NAICS that currently
lack three-country comparability nor to revise sectors other than those
specifically listed above. Work is under way to determine if 5-digit
agreement can be reached among Canada, Mexico, and the United States in
Construction and Wholesale Trade.
DATES: To ensure consideration, all proposals for sector hierarchies
and new industries must be made in writing and should be submitted as
soon as possible, but should be received no later than April 26, 1999.
In addition, all comments on the usefulness and advisability of
completion of the Construction and Wholesale Trade sectors,
modifications to national industries for department stores and nonstore
retailers, changes to alleviate implementation problems, and timing of
completion activities must be submitted in writing and be received no
later than April 26, 1999.
ADDRESSES: Correspondence concerning the usefulness and advisability of
completion of the Construction and Wholesale Trade sectors,
modifications to national industries for department stores and nonstore
retailers, changes to alleviate implementation problems, and timing of
completion activities should be made to Carole Ambler, Chair, Economic
Classification Policy Committee, Bureau of the Census, Room 2633-3,
Washington, D.C. 20233, E-mail address: cambler@ccmail.census.gov,
Telephone number: (301) 457-2668, FAX number: (301) 457-1343.
All proposals for the hierarchical structure of the Construction
sector and Wholesale Trade sector as well as for new industries in
these sectors, or for changes to the national industries for department
stores and nonstore retailers based on the production-oriented
conceptual framework of NAICS, should be addressed to: John Murphy, Co-
chair, Administrative Subcommittee of the ECPC, Bureau of Labor
Statistics, 2 Massachusetts Avenue N.E., Room 4840, Washington, DC
20212, E-mail address: Murphy__John@bls.gov, Telephone number: (202)
606-6475, FAX number (202) 606-6645.
Electronic Availability: This document is available on the Internet
from the Census Bureau Internet site via WWW browser. To obtain this
document, connect to ``http://www.census.gov'' then select ``Subjects A
to Z,'' then select ``N,'' then select ``NAICS (North American Industry
Classification System).'' This WWW page contains previous NAICS United
States Federal Register notices, ECPC Issues Papers, ECPC Reports, the
current structure of NAICS United States, and related documents.
Public Review Procedure: All comments and proposals received in
response to this notice will be available for public inspection at the
Bureau of the Census, U.S. Department of Commerce, Suitland Federal
Center, Suitland, Maryland. Please telephone the Census Bureau at (301)
457-2672 to make an appointment to enter the Federal Center. All
proposals recommended by the ECPC will be published in the Federal
Register for review and comment prior to final action by OMB. Those
making proposals will be notified directly of action taken by the ECPC;
others will be advised through the Federal Register.
FOR FURTHER INFORMATION CONTACT: John Murphy, Co-chair, Administrative
Subcommittee of the ECPC, Bureau of Labor Statistics, 2 Massachusetts
Avenue NE, Room 4840, Washington, DC 20212, E-mail address:
Murphy__John@bls.gov, Telephone number: (202) 606-6475, FAX number
(202) 606-6645.
SUPPLEMENTARY INFORMATION: The Supplementary Information section of
this notice is divided into five parts: Part I summarizes the
background for NAICS 1997; Part II contains areas of less than full
comparability at the individual detailed industry level of NAICS; Part
III details the process that the ECPC will use to develop its
recommended actions for the sectors targeted for completion; Part IV
outlines a work plan that will be used for the proposed completion of
the NAICS sectors for Construction and Wholesale Trade, and the
national industries for department stores and nonstore retailers; and
Part V highlights areas in which the ECPC is soliciting public
comment..
Part I: Background of NAICS 1997
NAICS is a system for classifying establishments by type of
economic activity. Its purposes are: (1) to facilitate the collection,
tabulation, presentation, and analysis of data relating to
establishments, and (2) to promote uniformity and comparability in the
presentation and analysis of statistical data describing the economy.
NAICS is used by Federal statistical agencies that collect or publish
data by industry. It is also widely used by State agencies, trade
associations, private businesses, and other organizations.
Mexico's Instituto Nacional de Estadistica, Geografae Informatica
(INEGI), Statistics Canada, and the United States Office of Management
and Budget (OMB), through its Economic Classification Policy Committee
(ECPC), collaborated on NAICS to make the industry statistics produced
by the three countries comparable. NAICS is the first industry
classification system developed in accordance with a single principle
of aggregation, the principle that producing units that use similar
production processes should be grouped together in the classification.
NAICS also reflects in a much more explicit way the enormous changes in
technology and in the growth and diversification of services that have
marked recent decades. Industry statistics presented using NAICS also
are comparable with statistics compiled according to the latest
revision of the United Nations' International Standard Industrial
Classification (ISIC, Revision 3) for some sixty high-level groupings.
For the three countries, NAICS provides a consistent framework for
the collection, tabulation, presentation, and analysis of industry
statistics used by government policy analysts, by academics and
researchers, by the business community, and by the public. However,
because of different national economic and institutional structures as
well as limited resources and time for constructing NAICS, its
structure was
[[Page 9417]]
not made entirely comparable at the individual industry level across
all three countries. For some sectors and subsectors, the statistical
agencies of the three countries agreed to harmonize NAICS based on
sectoral boundaries rather than on a detailed industry structure. The
portions of NAICS that are not comparable at the detailed industry
level are delineated in Part II of this section.
The four principles of NAICS are:
NAICS is erected on a production-oriented conceptual framework.
This means that producing units that use the same or similar production
processes are grouped together in NAICS.
NAICS gives special attention to developing production-oriented
classifications for (a) new and emerging industries, (b) service
industries in general, and (c) industries engaged in the production of
advanced technologies.
Time series continuity is maintained to the extent possible.
Adjustments will be required for sectors where Canada, Mexico, and the
United States have incompatible industry classification definitions in
order to produce a common industry system for all three North American
countries.
The system strives for compatibility with the two-digit level of
the International Standard Industrial Classification of All Economic
Activities (ISIC Rev. 3) of the United Nations.
The ECPC is committed to maintaining the principles of NAICS as it
develops further refinements. The current round of completion
activities is limited in scope based on the NAICS' principle regarding
time series continuity. The ECPC realizes that this completion activity
may occur before all users have initially implemented NAICS. The narrow
focus of the completion activities, and the importance of Construction
and Wholesale Trade to the economies of all three countries, will
outweigh the time series breaks and resulting noncomparability of time
series. Users are encouraged to implement the 2002 revision of NAICS
once it becomes official.
NAICS uses a hierarchical structure to classify establishments from
the broadest level to the most detailed level using the following
format:
Sector........................ 2-digit.......... Sectors represent the
highest level of
aggregation. There
are 20 sectors in
NAICS representing
broad levels of
aggregation.
Subsector..................... 3-digit.......... Subsectors represent
the next, more
detailed level of
aggregation in
NAICS. There are 96
subsectors in NAICS.
Industry Group................ 4-digit.......... Industry groups are
more detailed than
subsectors. There
are 311 industry
groups in NAICS.
NAICS Industry................ 5-digit.......... NAICS industries are
the level that, in
most cases,
represents the
lowest level of
three country
comparability. There
are 721 5-digit
industries in NAICS.
National Industry............. 6-digit.......... National industries
are the most
detailed level of
NAICS. These
industries represent
the national level
detail necessary for
economic statistics
in an industry
classification.
There are 1170 U.S.
industries in NAICS
United States.
Sectoral hierarchies and specific industry proposals will be
considered within the structure presented above.
Part II: NAICS Areas Without Full Comparability at the Detailed
Industry Level
The NAICS sectors that currently are not comparable at the detailed
industry level are: utilities; construction; wholesale trade; retail
trade; finance and insurance; and public administration. The subsectors
that are not comparable at the detailed industry level are: Real
Estate; Waste Management and Remediation Services; as well as other
services including Personal and Laundry Services, and Religious,
Grantmaking, Civic, Professional and Similar Organizations. Separate
agreements providing for detailed industry comparability between Canada
and the United States were reached for the Utilities, Retail Trade, and
Finance and Insurance Sectors. To distinguish the three countries'
versions of NAICS, they are called NAICS Canada, NAICS Mexico (SCIAN
Mexico, in Spanish), and NAICS United States.
The ECPC recognizes the need for complete comparability in the
NAICS structures being used in the three countries. The ECPC also
recognizes the time sensitive nature of any revisions for 2002. For
this reason, the ECPC will limit consideration of work for completion
to those areas of NAICS where there currently is comparability at the
two-digit (sector) level only. The Public Administration sector is not
a priority for the ECPC at this time. Although there is only two-digit
comparability for Public Administration, the governmental structures in
each of the three countries are very different, and there is no great
need for comparable statistics within the Public Administration sector
at the detailed industry level in all three countries. There is
agreement between NAICS Canada and NAICS United States in the Retail
Trade sector at the five-digit level. Further work in this area also is
not a priority for the ECPC. The Finance and Insurance sector is
currently comparable at the 3-, 4-, or 5-digit level with Canada and
Mexico. This sector is the subject of various legislative efforts in
the United States, and significant change in the structure of the
industry may occur in the next five years. For this reason, the United
States would recommend postponing any further work in Finance and
Insurance until 2007 or later.
Revisions to Construction and Wholesale Trade will create
significant disruptions for data users but are considered worthwhile if
lower level comparability can be achieved with our partners in Canada
and Mexico. The ECPC will strive to minimize any disruptions by
revising only those sectors of critical importance in all three
countries where there is currently two-digit comparability.
Part III: U.S. Procedures and Solicitation of Proposals for
Hierarchies and Detailed Industries
1. Proposals for sectoral hierarchies in Construction and Wholesale
Trade should be consistent with the production-oriented conceptual
framework incorporated in the principles of NAICS. When formulating
proposals, please note the hierarchies should contain only those
activities currently included by all three countries in the sector that
is addressed by a proposal. The scope of existing sectors and
industries in NAICS is detailed in the NAICS United States Manual.
Copies of this manual can be purchased from the National Technical
Information Service (NTIS) at (800) 553-6847 or http://www.ntis.gov.
Proposals must be in writing and should include the following
information:
(a) Subsector(s) (3-digit level), and industry group(s) (4-digit
level), detail for the entire sector. These breakouts
[[Page 9418]]
should be based on a production-oriented breakout to be used at the
higher levels of the sectoral hierarchy. A narrative description of the
production-oriented justification that forms the basis for a sectoral
hierarchy should be included. These 3-digit and 4-digit breakouts will
form the basis used to create lower level industries. For example, a
sectoral proposal for Construction might include the following detail:
Sector 23 Construction
Subsector 231............................ Wood Construction.
Industry Group 2311...................... Wood Residential Buildings.
Industry Group 2312...................... Wood Nonresidential
Construction.
Subsector 232............................ Masonry Construction.
Industry Group 2321...................... Masonry Residential
Buildings.
Industry Group 2322...................... Masonry Nonresidential
Construction.
Subsector 233............................ Steel and Concrete
Construction.
Industry Group 2331...................... Steel and Concrete
Buildings.
Industry Group 2332...................... Other Steel and Concrete
Construction.
In this hypothetical proposal, the building material and related
processes are the production-oriented justification for higher level
breakouts within the Construction sector. The sectoral hierarchy
proposals may contain information at the NAICS industry (5-digit level)
as well as the national industry level (6-digit), if desired.
(b) Specific indication of the relationship of the proposed
sectoral hierarchy(ies) to the 1997 NAICS United States sector,
subsector, industry group, NAICS industry, and national level industry
detail.
2. Proposals for new or revised 6-digit industries in the
Construction and Wholesale Trade sectors and the detailed national
level industries for department stores and nonstore retailers should be
consistent with the production-oriented conceptual framework
incorporated into the principles of NAICS. When formulating proposals,
please note that an industry classification system groups the economic
activities of establishments or producing units, which means that
products and activities of the same producing unit cannot be separated
in the industry classification system. Proposals must be in writing and
should include the following information:
(a) Specific detail about the economic activities to be covered by
the proposed industry, especially its production processes, specialized
labor skills, and any unique materials used. This detail should
demonstrate that the proposal groups establishments that have similar
production processes in accordance with the NAICS production-oriented
industry concept (see ECPC Issues Paper No. 1, ECPC Reports Nos. 1 and
2).
(b) Specific indication of the relationship of the proposed
industry to existing NAICS United States 6-digit industries.
(c) Documentation of the size and importance of the proposed
industry in the United States.
(d) Information about the proposed industry in Canada and Mexico
would be helpful, if available.
Evaluation Criteria
Proposals submitted to the ECPC recommending a sectoral hierarchy
or requesting the creation of, or a revision to, a 6-digit industry
will be evaluated using production-oriented criteria. The ECPC and its
subcommittees will evaluate proposals for sectoral hierarchies before
evaluating specific industry proposals. Please note that a detailed
industry proposal that meets the production-oriented conceptual
framework of NAICS may not be accepted if it is in conflict with an
accepted sectoral hierarchy proposal. ECPC Issues Paper No. 4,
``Criteria for Determining Industries,'' describes some measures that
may be used, e.g., the specialization ratio and the heterogeneity
measure (see also ECPC Report No. 2, ``The Heterogeneity Index: A
Quantitative Tool to Support Industry Classification''). Other measures
of the similarity among establishments will be considered and developed
where necessary. For example, a coefficient of variation measure may be
applied where applicable. However, all these statistical measures will
supplement, not supplant, industry expertise and expert judgments about
industry production processes and similarities.
Proposed industries must also include a sufficient number of
companies so that Federal agencies can publish industry data without
disclosing information about the operations of individual firms. The
ability of government agencies to classify, collect, and publish data
on the proposed basis will also be taken into account (see ECPC Issues
Paper No. 3). Proposed changes must be such that they can be applied by
agencies within their normal processing operations.
Proposals will be exchanged with Statistics Canada and INEGI, and
reviewed jointly in the completion of NAICS. It would be helpful,
although not required, if written proposals for new industries in NAICS
present any available information on whether the proposed industry
exists in Canada or Mexico, and whether the proposal can be implemented
in those countries.
Part IV: Work Plan
Within the framework of Parts II and III above, the ECPC intends to
begin the completion of targeted sectors. This notice requests specific
proposals for NAICS. Public comments and input from government agencies
that collect, compile, and use data that are categorized by economic
classifications will contribute to the completion of targeted sectors
in NAICS. The ECPC will charter a subject matter subcommittee to
address wholesale trade proposals and a second subcommittee to address
construction proposals. The Administrative Subcommittee of the ECPC
will address proposals for national industries related to department
stores and nonstore retailers, as well as implementation problems that
may arise. The Administrative Subcommittee will coordinate and review
the efforts of the subject matter subcommittees and submit detailed
recommendations to the ECPC. The completion activities will take a top
down approach to the targeted sectors. First, a subsector and industry
group structure will be developed and agreed upon by the ECPC, INEGI,
and Statistics Canada. Creation of NAICS and national level industries
will be based on the sectoral structures developed. The specific
milestones for additional activities of the ECPC are as follows:
Publish Federal Register notice of proposed ECPC recommendations
for public comment. (Fall 1999)
Publish Federal Register notice of final OMB decisions. (Spring
2000) Begin implementation activities. (Fall 2000)
Part V: Request for Comments
The ECPC is seeking comments on: (1) the usefulness and
advisability of completing the Construction and Wholesale Trade sectors
in NAICS, modifying the national industries for department stores and
nonstore retailers, and addressing specific problems that may be
identified in the implementation of NAICS 1997; and (2) the timing of
the proposed completion activities. Using the procedures discussed in
Part III above, the ECPC is also seeking proposals for: (1) the
hierarchical structures of the Construction sector and the Wholesale
Trade sector, (2) new industries for the Construction and Wholesale
Trade sectors, and (3) modifications to the national industries for
department stores and nonstore retailers based on
[[Page 9419]]
the production-oriented conceptual framework used in NAICS.
Donald R. Arbuckle,
Acting Administrator and Deputy Administrator, Office of Information
and Regulatory Affairs.
[FR Doc. 99-4663 Filed 2-24-99; 8:45 am]
BILLING CODE 3110-01-U
