The visitors led when John Stones’ sloppy pass allowed Nathan Redmond to round Claudio Bravo and slot in.
City improved after being booed off by some home fans at the break, equalising when half-time substitute Kelechi Iheanacho prodded in Leroy Sane’s low cross.
Pep Guardiola’s side controlled the second half as they searched for a winner, but Saints keeper Fraser Forster produced splendid saves to deny Ilkay Gundogan and David Silva.
City’s inability to grab a second goal means ex-Barcelona and Bayern Munich boss Guardiola has failed to win in five successive matches for only the second time in his managerial career.
However, the point was still enough to lift the Blues back above Arsenal and Liverpool to the Premier League summit.
Southampton stay eighth after extending their unbeaten league run to a fifth game.
City’s recent struggles are barely believable after the swaggering start they made to the season, when they won all of Guardiola’s opening 10 matches.
The former Spain international had been forced to defend his tactics following Wednesday’s 4-0 Champions League defeat at his former club Barcelona, which came after their first loss of the season at Tottenham and the subsequent home draw against Everton.
But there were signs of the home support becoming frustrated with his team’s build-from-the-back approach, not least when many could be heard jeering their team off at the break after Stones’ error.
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