Canada's trade surplus with the rest of the world was C$1.41 billion ($1.11 billion) in January, the largest since July 2014. Analysts polled by Reuters had predicted a deficit of C$1.40 billion.
"In a sea of really bad news this is an island paradise. Everything is up," said Peter Hall, chief economist at Export Development Canada.
"There are a lot of moving parts here but overall I would say this is generally better than expected," said Doug Porter, chief economist at BMO Capital Markets.
The Canadian dollar was trading 0.1% lower after the data at 1.2661 to the greenback, or 78.98 US cents, easing back from a rally the previous day.
Revenues dropped by 15.6% reflecting a broad-based decline including lower tax revenues. Program expenses, meanwhile, jumped 86.1% largely due to emergency transfers to individuals, businesses and the provinces.
On a monthly basis, Canada posted a deficit of C$16.15 billion in December 2020, compared to the C$782 million surplus recorded in December 2019.
Canada's most populous province of Ontario said it would extend a stay-at-home order in Toronto and nearby suburbs by two weeks, but residents of three largely rural public health regions can leave their homes starting on Wednesday.
The seasonally adjusted index rose to 48.4 from 46.7 in December. A reading below 50 indicates decreasing activity.
The Ivey PMI measures the month-to-month variation in economic activity as indicated by a panel of purchasing managers in the public and private sectors from across Canada.
US crude oil prices were down 0.5% at $52.09 a barrel, while the Canadian dollar declined 0.1% to 1.2746 per greenback, or 78.46 US cents. It touched its weakest since last Monday at 1.2799.
The Bank of Israel said on Monday it expects the economy to rebound quickly in 2021 if the country's fast start to vaccinating people against COVID-19 is maintained.
Bitcoin extended gains over the weekend to reach a new high of $28,377.94 before stepping back to $26,457.32, bringing the total value of the cryptocurrency in circulation to over $500 billion.
Canada's real GDP rose 0.4% in October, beating analyst estimates of a 0.3% gain. Statscan said its preliminary estimate for November was also a gain of 0.4%.
The Canadian dollar was trading 0.2% higher at 1.2879 to the greenback, or 77.65 US cents, after the data.