The Westpac-Melbourne Institute leading index - which indicates the likely pace of economic activity three to six months in to the future - was 95.84 in August, continuing a gradual rise after hitting a low point of 94.75 in April.

However, it still indicates an annual economic growth rate below the long-term trend of 2.75 per cent.

The national economy saw a hefty seven per cent contraction in the June quarter, confirming the nation was in recession for the first time in nearly 30 years.

"While the leading index growth rate has continued to improve from the extreme low set in April, it remains below the pace immediately prior to Australia's nationwide lockdown," Westpac chief economist Bill Evans said.

Even so, Mr Evans said the result was broadly consistent with his bank's view that growth in the September quarter will be a solid 1.8 per cent.

This is despite an expected four per cent contraction in Victoria because of its stiff coronavirus restrictions, a state that accounts for around 25 per cent of national economic activity.

Index components assisting the improvement in August were rising share prices, a lift in consumer sentiment and unemployment expectations.

The biggest drag was a monthly drop in hours worked in the month.

Official labour force figures for August are due on Thursday.

Economists expect these will show the unemployment rate ticking up to 7.7 per cent, which would be its highest level in 22 years.

The jobless rate has already jumped from 5.1 per cent in February to 7.5 per cent in July.

The number of people in employment as of August is expected to fall by around 35,000, ending two months of exceptionally strong increases as restrictions were unwound, only to be thwarted by a second coronavirus wave in Victoria.

Australian Associated Press