While that was better than the flat result in a consensus market forecast of 3.9 percent, economists focused on a fall in the ratio of job offers to job seekers.
That ratio fell to 0.95, meaning 95 jobs were available per 100 applicants, below a median forecast of 0.96 and continuing a fall from a peak of 1.07 last June. "The trend shows hiring is slowing for the moment especially among small businesses, while big corporations continue to recruit new employees briskly," said Yoshiki Shinke, senior economist at Dai-ichi Life Research.
Overall household spending fell 1.6 percent in March from a year earlier in price-adjusted real terms, countering a median market forecast for a 0.5 percent increase and further signalling weak consumer spending.
The Bank of Japan is expected to say the economy is slowing down for the time being in its economic outlook report.
Still, like other central banks, the BOJ faces rising fuel, raw materials and food prices as it ponders what to do with rates, already at a very low 0.5 percent.
Japan's core annual inflation rate hit a decade high of 1.2 percent in March.
With a credit crisis weighing on global economic growth, investors have until recently been looking for a BOJ rate cut, rather than an increase, especially because consumer prices in industrialised economies are climbing on higher commodity costs rather than strengthening demand.
But as the expectation is growing that the Federal Reserve's easing cycle is coming to an end after one more 0.25 percentage point cut expected on Wednesday, markets are now pricing in a BOJ rate hike.
Swap contracts on the overnight call rate are pricing in around a 60 percent chance of a rate hike by the end of year.
In more downbeat news for the Japanese economy, a private survey showed manufacturing activity in Japan slipped to a five-year low in April, hurt by a marked decline in new orders and a worsening business environment.
The NTC Research/Nomura/JMMA Purchasing Managers Index, which gives an early snapshot of the health of manufacturing, declined to a seasonally adjusted 48.6 in April from 49.5 in March and was the lowest since 48.1 in February 2003. A reading below 50 points to a contraction in manufacturing activity.