The Citizens went down at Old Trafford after mistakes from goalkeeper Ederson let in Anthony Martial and Scott McTominay for the hosts.
But they had no answer to United, who benefitted from an uncharacteristically erratic display between the posts from Ederson to take a valuable 2-0 win.
Anthony Martial opened the scoring on the half hour when the France forward beat Ederson at his near post, while in stoppage time the goalkeeper was again at fault as he threw the ball straight to Scott McTominay, who converted from distance into the empty net.
The result leaves City evee further from Liverpool at the Premier League summit, but Guardiola defended his players’ performance over the 90 minutes.
“We played good, we missed a little in the final third but the second half was better and it was a good performance,” he explained to the BBC .
“We play the same way, tried the press and defend well and we did well.
“Our game is there, we played really good in terms of coming here. They wait and did long balls on the counterattack for Daniel James and Anthony Martial.
“We did our game but unfortunately we conceded a goal. They waited for our mistakes.”
He added to Sky Sports : “We played good. We conceded a goal and should have avoided it, but in the second half we played good as well.
“So congratulations to Manchester United. The quality of the opponent always count.”We played good. Yes, we could have played better if we win 5-0.”
Sunday’s defeat means that City continue to trail Liverpool by 25 points, leaving open the possibility that the Premier League title could be decided as early as next week .
Should the reigning champions lose at home to either Arsenal or Burnley in the next six days then Jurgen Klopp’s men would be guaranteed the crown if they overcome Everton in Monday’s Merseyside derby at Goodison Park.