Guidelines for local economic strategies, which councils will have a statutory duty to prepare from next year, have been published by ministers.
In less than eight months, all councils will be required to prepare annual assessments of their local economy to help inform economic decisions and investment.
Understanding how residents, especially the long-term unemployed, can find and stay in work is singled out as a priority objective.
The guidance also encourages councils to collaborate with local businesses and social enterprises to put together the plans.
Local government minister, Lord McKenzie, said: “In these times, every effort should go towards moving towards an economic recovery. Councils are in a perfect position to do this for their area.
“Having the bare facts at hand will help accelerate their work to boost the economic prospects for their area, and put them on the front foot to tackle local challenges and exploit new opportunities.”
Other highlighted themes include business start ups and small business growth, whether local businesses and universities are collaborating to their potential, and what social and economic factors affect local worklessness.