The reigning champions, who secured the league title in dramatic fashion last season, have struggled over the festive period this term, needing a late goal to beat Reading before falling to a 1-0 defeat to Sunderland on Boxing Day.
The Red Devils also scored late on to secure victory over Newcastle on Wednesday, extending their lead at the top of the table, but things could be even worse for City had Sir Alex Ferguson's men not drawn with Swansea beforehand.
However, the Italian indicated he is still calm despite the large gap, acknowledging that their rivals have the upper hand but insisting that his players will have "no problem" in catching up.
|O'NEILL DELIGHTED TO BEAT CITY
|6/1||Man City are 6/1 with Paddy Power to beat Norwich 1-0 at Carrow Road this weekend
"They are on the top but we have the time to recover. Seven points are no problem."
Critics have suggested that Joe Hart should have saved Adam Johnson's low shot that handed the Black Cats victory on Wednesday, as the effort slipped under his grasp.
But the 48-year-old manager defended his keeper, who declared he was not to blame, and instead praised the former City attacker for his inventiveness.
"Johnson was really clever because we all thought he was going to cross," he explained.
"Instead, he shot. He did very well. I do not think Joe Hart was at fault."