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Canada's latest trade numbers don't speak well for pretty much anything. But they look especially damaging to the Bank of Canada's vision of when – and, even more importantly, how – the economy will get back to full speed.

The merchandise trade report released by Statistics Canada on Wednesday was, in a word, grim. The April trade deficit of $2.97-billion was the second-biggest on record – trailing only the March deficit, which was revised to $3.85-billion from the originally reported $3.02-billion. That's a $6.8-billion trade hole in just two months; for the year to date, the cumulative trade deficit is nearly $11-billion.

And the April data can't hide behind some of the best excuses for poor trade numbers that we could turn to earlier in the year. It wasn't about the oil slump; energy-product exports actually jumped 5.9 per cent in the month, but non-energy exports fell 2 per cent. It wasn't about the blizzards, deep freeze and port strikes that appeared to constrain U.S. demand for Canadian shipments in the depths of winter. It wasn't about new auto-plant retooling shutdowns that sapped motor vehicle exports in previous months. It wasn't a case of imports and exports both rising (a sign of improving overall demand) but with more growth on the import side; April featured declines in both imports (down 2.5 per cent) and exports (down 0.7 per cent).

The slump in trade in the first four months of the year will certainly put the Bank of Canada on the spot. Despite the damage from the oil shock, the central bank has been sticking to its guns that the economy will close its output gap and return to operating at full capacity by the end of 2016. But given the size of trade hole in the first four months of the year, it's likely that we've actually been moving in the wrong direction – the output gap is widening. (The decline in first-quarter gross domestic product, reported by Statscan last week, tells the same story.) And with trade starting the second quarter looking like it is continuing to be a drag on economic growth, it's hard not to perceive that the horizon to full capacity is receding from our vision.

The Bank of Canada has been preaching the virtues of two key factors – the recovery of exports and business investment – to lead the economy out of its oil slump and back to solid growth in the second half of this year. It could still happen. But we're getting pretty late in the first half now; forgive me if I'm tapping my watch and looking anxiously for the arrival of these saviours. They sure didn't send an ETA in these trade data.

Where is the export recovery? Exports have now fallen every month this year; they are nearly 5 per cent below end-of-2014 levels. Even if you exclude the beleaguered energy sector, exports this year have fallen nearly 3 per cent.

Yes, exports to the U.S. rose 1.6 per cent in April, but that comes after eight consecutive months of declines. Over the past 12 months, exports to the U.S. are down 4.3 per cent. While April's upturn in U.S. shipments may provide a glimmer of hope, it appears largely driven by a rebound, from great depths, of the energy sector.

Several key non-energy sectors that were supposed to benefit from an accelerating U.S. economy this year have gone AWOL. Exports of metal ores fell 5.8 per cent in April; metal products fell 1.4 per cent. Building and packaging materials dropped 5.8 per cent. Consumer goods slumped 6 per cent. Industrial machinery and equipment flatlined in the month, after slipping 1.2 per cent in March.

Given recent disappointing U.S. economic data, it's looking less certain that the economic pace south of the border this year will be as brisk as everyone was talking about a few months ago. If U.S. demand fails to live up to expectations, the envisioned Canadian recovery will be in serious jeopardy.

Meanwhile, exports to the rest of the world – which represent one-quarter of Canada's total exports – slumped 7.3 per cent in April, and have clawed out a thin 1-per-cent gain year over year.

Where is the business investment? Canada's imports of industrial machinery and equipment, a key indicator of businesses stepping up spending on their facilities and output capabilities, fell 2.4 per cent in April and are down 4.4 per cent in the past three months. The decline of the dollar and the uncertain economic outlook may be pushing machinery and equipment investments back into their shell.

There's little question that the elements in trade for an economic recovery remain missing in action. Bank of Canada Governor Stephen Poloz has remained optimistic about a brighter second quarter and a strong second half, but with each new economic release, the doubts creep in. Maybe the cavalry won't arrive on time; maybe reinforcements, in the form of another interest rate cut, might need to be called in.

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