The North American Product Classification System (NAPCS) is a comprehensive, market- or demand-based, hierarchical classification system for products (goods and services) that (a) is not industry-of-origin based but can be linked to the NAICS industry structure, (b) is consistent across the three North American countries, and (c) promotes improvements in the identification and classification of service products across international classification systems, such as the Central Product Classification System of the United Nations. For more information, see discussion paper, “Overview of NAPCS Objectives, Guidance, and Implementation: A United States Perspective.” The three countries agreed that the objectives and principles articulated in sections A through C of that paper define the purposes of NAPCS and the operational guidelines for creating it.
In February 1999, the statistical agencies of Canada, Mexico, and the United States launched a joint multi-phase initiative to develop NAPCS. In planning the NAPCS initiative, the three countries began with a consensus on the proposition that improved product data for service industries is critical to improving vital economic measures related to measuring the growth of output, prices, productivity, and trade. In recognition of this fact, NAPCS work first focused on identifying and defining the products produced by industries in the 12 NAICS service sectors from Sector 48-49 through Sector 81. Embodying research conducted by 13 trilateral working groups, with extensive input from industry experts, this effort was implemented in three phases and was completed in 2009.
Phase I was launched in early 1999 to explore the feasibility of identifying and defining service products across the three countries, and it focused on the products produced by industries in four NAICS service sectors: Sector 51: Information, Sector 52: Finance and Insurance, Sector 54: Professional, Scientific, and Technical Services, and Sector 56: Administrative and Support and Waste Management and Remediation Services. Phase I generated 36 product lists that cover the final products produced by 117 US service industries. Products from 26 of these lists were incorporated into the 2002 Economic Census, and some were incorporated into the 2001 and subsequent Services Annual Surveys. Based on the success of Phase I, the three countries agreed that the NAPCS should continue and be expanded to cover the products of industries in all NAICS service sectors from Sector 48-49 through Sector 81 (excluding those in Sector 814, Private Households, and Subsector 525, Funds, Trusts, and Other Financial Vehicles).
Phase II, launched in July 2001, extended NAPCS to the industries in five additional NAICS service sectors: Sector 48-49: Transportation and Warehousing, Sector 61: Educational Services, Sector 62: Health Care and Social Assistance, Sector 71: Arts, Entertainment and Recreation, and Sector 72: Accommodation and Food Services.
Phase III was launched in May 2004, and it extended NAPCS to industries not covered in the sectors addressed under Phases I and II and to industries in Sector 53: Real Estate and Rental and Leasing, Sector 55: Management of Companies and Enterprises, and Sector 81: Other Services (except Public Administration). Taken together, Phases II and III researched the final products produced by more than 250 US service industries.
The products developed under Phases I – III are assembled into 102 product lists that identify and define the significant products produced by about 370 US service industries. These lists include 98 that are at the trilateral level; three at the bilateral level (US and Mexico for NAICS 55-Management of Companies and Enterprises, NAICS 621210-Offices of Dentists, and NAICS 621610-Home Health Care Services); and one at the US-only level (for NAICS 621-2 (except 6212, 6, and 9)-Health Care Services of Physicians, Health Care Practitioners (except Dentists) and Hospitals). Product lines developed from all 102 lists were incorporated into product collection forms developed for the 2007 and 2012 Economic Censuses, and they were incorporated incrementally into the Service Annual Survey (beginning in 2001).
NAPCS development beyond Phase III for the products of industries in NAICS Sector 11: Agriculture, Forestry, Fishing and Hunting; Sector 21: Mining; Sector 22: Utilities; Sector 23: Construction; Sector 31-33: Manufacturing; Sector 42: Wholesale Trade; and Sector 44-45: Retail Trade was completed by the three countries.
In addition, the three countries developed a comprehensive NAPCS structure, merging and unduplicating products of NAICS industries, and in some cases, renegotiating trilateral products to align with the demand-oriented concept. The 2017 NAPCS structure can be viewed on the NAPCS Structure page or below.
NAPCS History:
- Overview of NAPCS Objectives, Guidance, and Implementation Strategy and Goals: A United States Perspective, April 2003. [PDF, 22KB]
- NAPCS Structure Illustration: Possible Product Groups, Sub-Groups, and Classes, April 2003. [PDF, 70KB]
- NAPCS Application in the United States Statistical System: A Proposal, December 2002. [PDF, 19KB]
- An Approach for Identifying and Defining Intellectural Property (IP) and Related Products in Product Classification Systems, September 2002. [PDF, 64KB]
- North American Product Classification System: Concepts and Process of Identifying Service Products, September 2002. [PDF, 88KB]
- North American Product Classification System (NAPCS): What’s Been Done; What’s Being Done; What’s Next, April 2002. [PDF, 107KB]
- Accounting for Non-Market Products and Activities in NAPCS, February 2001. [PDF, 17KB]
- Guidelines for Grouping and Aggregating Products in NAPCS, December 1999. [PDF, 98KB]
- Identification and Classification of Service Products: Phase I of Initiative to Create a North American Product Classification System, April 1999. [PDF, 48KB]
- April 16, 1999 Federal Register Notice – Initiative To Create a Product Classification System, Phase I: Exploratory Effort To Classify Service Products; Notice. Vol. 64, No. 73. [ PDF, 35KB]
- Developing a Product Classification System for the United States, June 1998. [PDF, 1.1KB]
NAPCS FAQs:
| 1. What is the purpose of NAPCS? |
| NAPCS provides a comprehensive demand/market-oriented classification framework for services and goods.
The intent of NAPCS is for use as a shared reference classification throughout the statistical communities of the United States, Canada, and Mexico for collection, tabulation, and analysis of data on the value of products produced by both goods- and services-producing industries and on the prices charged for those products. |
| 2. What is the official title for the initial version of NAPCS? |
| The three countries agree to refer to the initial version of the shared product classification system as North American Product Classification System (NAPCS) 2017 Beta 1.0.
This version is for testing by statistical programs to prove its efficiency in actual conditions and to identify necessary changes as an outcome of the test process. |
| 3. How is NAPCS structured? |
| The NAPCS structure comprises six hierarchical levels. At the highest level of the structure, there are 24 sections. Each section consists of subsections, divisions, groups, subgroups, and trilateral products. |
| 4. What is the revision cycle for NAPCS? |
| NAPCS will be reviewed for revision every five years. |
| 5. What is a reference classification? |
| NAPCS serves as a reference classification. For further details, the paper “Grading Criteria for International Statistical Classifications” describes reference classifications. |
| 6. What is the relationship between NAPCS and NAICS? |
| NAPCS, a product classification system, and NAICS, an industry classification system, are independent but complementary.
A product produced by multiple industries carries the same title, definition, and code in NAPCS, regardless of its industries of origin. Products can be linked to the industries that produce them, and industries can be linked to the products they produce. |
| 7. How does NAPCS improve economic measurement and analysis? |
| NAPCS provides a comprehensive list of products adopted by the U.S., Canada, and Mexico and will be incrementally implemented into economic statistics programs. These detailed product data will provide policymakers and the business community with the information needed to understand our ever-changing economies.
NAPCS enables the collection and tabulation of the source data needed to improve key economic measures of growth, prices, and productivity, and comparisons of these measures to international trade data. NAPCS allows consistent reporting of output and standardized concordances to international trade classifications, to improve comparisons of output and international trade data. NAPCS provides useful information to industry analysts to estimate market share for their firm or to investigate the growth of demand for the products of their firm with (a) those for the industry as a whole or (b) those that compete with or are closely associated with the products produced by the firm. |
| 8. Why did NAPCS initially focus on service industries? |
| In the early development of NAPCS, service industries accounted for almost 70% of economic activity, over 85 million employees, and a disproportionate share of economic growth, yet there remained a significant imbalance in the information available on service industries, the fastest growing segment of the New Economy, compared with the wealth of information available for manufacturing industries.
If left unaddressed, economic policymakers would be increasingly misinformed and misdirected about changes in the real economy, related to rates and sources of growth in output, prices, productivity, and trade. Moreover, services product information is critical to understanding some of the most hi-tech, dynamic, and rapidly growing areas of the service economy — information, communication, computer services, business services, and health. |
| 9. What role did industry experts play in developing NAPCS? |
Input from industry experts provided essential guidance on a variety of issues including:
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| 10. How can I comment on NAPCS? |
| Comments on NAPCS can be provided via email to [email protected]. All comments will be reviewed and considered over time as the system is reviewed for future revisions and as statistical programs move forward to implement NAPCS. |
NAPCS Structure:
The 2017 NAPCS structure is a six-level hierarchical structure consisting of 24 sections, 61 subsections, 172 divisions, 276 groups, 497 subgroups, and 1,167 trilateral products.
At this time, NAPCS is a reference classification system for beta testing by U.S. statistical programs as deemed appropriate.