NACE - Classification of Economic Activities

Introduction

The standard classification of industrial activity in Ireland is NACE, which is a statistical classification of economic activities* developed in the European Community. NACE is an acronym derived from the French title 'Nomenclature générale des Activités économiques dans les Communautés Européennes'. The NACE classification of economic activities in the European Community is used for a wide variety of European statistics in the economic, social, environmental, and agricultural domains.

The original version of NACE (NACE 70), introduced in 1970, was replaced by NACE Rev.1 in 1990, which in turn underwent a minor update in 2002 to establish NACE Rev. 1.1. The current version of NACE is NACE Rev. 2., which was established by Regulation (EC) no 1893/2006 of the European Parliament and of the Council in 2006. This was replaced by Commission Delegated Regulation (EU) 2023/137 of 10 October 2022, establishing NACE Rev. 2.1 which will be used for the production of European statistics from 2025.

Classification Structure

NACE consists of a hierarchical structure:

1. a first level consisting of headings identified by an alphabetical code (sections),
2. a second level consisting of headings identified by a two-digit numerical code (divisions), 
3. a third level consisting of headings identified by a three-digit numerical code (groups);
4. a fourth level consisting of headings identified by a four-digit numerical code (classes).

NACE is part of a family of international statistical classifications designed to allow comparisons of economic activities at national, European, and global levels. NACE is derived from the United Nations’ International Standard Industrial Classification of all Economic Activities (ISIC), but is more detailed than ISIC. ISIC and NACE have exactly the same items at the highest levels, but NACE is more detailed at lower levels. NACE is also closely linked with the European Classification of Products by Activity (CPA) and PRODCOM,  the European classification of goods used for statistics on industrial production in the EU.

NACE Rev. 2.1

Since the last version of NACE - Rev. 2 - was published in 2006, the European economy has evolved significantly, leading to a need to update the NACE classification. NACE Rev. 2.1 introduces new concepts at all levels of the classification, and restructures a number of the existing headings. At the same time, major efforts have been made to maintain the structure of the classification in all areas that do not explicitly require change based on new concepts.

NACE Rev. 2.1 entails several changes, including a number of new positions to reflect emerging forms of economic activity. At the same time, efforts have been made to maintain the structure of the classification in areas where change is unnecessary. The new version (NACE Rev. 2.1) can be accessed in the Official Journal and as Linked Open Data.

From 2025 onwards, European statistics will begin to be produced based on NACE Rev. 2.1. Eurostat and its partners are now hard at work to make sure that everything is ready for the changeover to this updated version, such as:

• Preparing explanatory notes detailing what is covered by each NACE Rev. 2.1 category;
• Providing a correspondence table defining into which NACE Rev. 2.1 class an activity classified in a particular NACE Rev. 2 class goes.

For more information:

• Legal act establishing NACE Revision 2 Update 1 (NACE Rev. 2.1)

• Thematic section on NACE Rev. 2.1

• Statistics Explained background article on NACE

Examples of usage

NACE is used in a wide variety of CSO and EU statistics, ranging from demographic to environmental statistics. Its main use is in business and macroeconomic statistics. National Accounts uses particular groupings or aggregations (labelled as A10, A21, A64, A88) based on NACE when publishing data. These groupings are set out in the European Systems of Accounts 2010. 

National

• Enterprise statistics
• National Accounts

 EU

• Structural Business Statistics (SBS)
• Short-term Business Statistics (STS)

*An economic activity takes place when resources such as capital goods, labour, manufacturing techniques or intermediary products are combined to produce specific goods or services. Thus, an economic activity is characterised by an input of resources, a production process, and an output of products (goods or services). An activity as defined in NACE may consist of one uncomplicated process (for example weaving), but may also cover an entire range of sub-processes, each mentioned in various categories of the classification (for example, the manufacturing of a car consists of specific activities such as casting, forging, welding, assembling, painting, etc.). If the production process is organised as an integrated series of elementary activities within the same statistical unit, the whole combination is regarded as one activity. NACE coding is based on the 'principal activity' of a unit, where most of the gross value is added. Units should be classified to the category that best describes their activity e.g. for NACE Rev. 2, retail of shoes - 47.72 - 'Retail sale of footwear and leather goods in specialised stores'.