Industry classification

Okay, imagine that there are lots of different kinds of stores in your neighborhood. There are grocery stores, toy stores, clothing stores, and more. We can group these stores into categories based on what they sell, like food or toys or clothes.

Similarly, in the grown-up world, there are lots of different kinds of businesses that make and sell different things. We can group these businesses into categories based on what they make and sell. This grouping is called "industry classification."

For example, there are businesses that make cars, businesses that make clothes, and businesses that make software. Each of these businesses belongs to a different industry.

Why do we need to group businesses into industries? Well, it helps us to understand how different parts of the economy are doing. If the car industry is doing well, that means that lots of people are buying cars and the companies that make them are doing well too. If the software industry is doing well, that means lots of people are buying software and the companies that make it are doing well too.

So, industry classification helps us understand which parts of the economy are doing well and which ones are not. It helps us keep track of how different businesses are doing and how the economy as a whole is doing.