The Blues suffered their third Premier League defeat on the road this season but are still on top of the league.
“We bounced back after defeats to Wigan and Aston Villa and we must do it again,” said Ballack.
“We could have got a draw if we’d scored from the penalty spot and that would have been a good away result.
“Even after that we had a good chance to equalise, so we have to take some positives from the game.
“We’re disappointed to lose but we have to remember the good things – the way we fought back and the fact we deserved a draw.
“We respect every team behind us and we’ve lost against a strong team. It looks like City are ready to fight for the title.
“I don’t know what their target is but they showed against us that they have a good team and with a bit of luck they can beat sides like us.
“They’ve spent a lot of money, and they have a lot of good players, so it’s not a surprise. But even if you spend a lot of money you have to go step-by-step.”