City I think still have a better squad on paper but, a few differences between this and last season
1) KDB, their best player been out
2) They won at a canter and even in the past and probably thought they'd keep doing more of the same. With Liverpool winning and this time, unlike last season, when things were difficult and they pulled out those last minute wins, things haven't gone their way. Even in the past they've not had much of fight in them to defend their title, part of the merc DNA I suppose - not sure how much they fight for the shirt.
3) This Liverpool squad is hungrier and have enough now to keep things going even with injuries or having to bring players on to change a game, like Shaquiri and Sturridge
In the next week, we very well may be looking at a completely different picture though, should Liverpool lose ground in the Arsenal and City games. If they don't, then think City will not put up that much of a fight rest of the season.