City meet their neighbours in the Community Shield at Wembley on Sunday at the start of a season in which they hope to challenge for the Premier League title.
But Mancini's expensively-assembled FA Cup winners finished nine points behind champions United last term and the Italian sees them as the benchmark.
He said: "Manchester United at the moment are on top.
"They are a strong team, they won the Premier League and have bought four or five good players.
"I think we are very close but at the moment they are above us."
City have again added to their squad over the summer, most notably by paying a club record ?38million for Argentina forward Sergio Aguero.
Defenders Gael Clichy and Stefan Savic have also been recruited along with goalkeeper Costel Pantilimon.
United manager Sir Alex Ferguson says he welcomes City's challenge because it prevents him becoming complacent.
Ferguson, who himself has signed three players over the summer, said: "I thought maybe they would spend more this summer and that may still happen - they may still sign a couple more players.
"We get this almost every year when clubs around about us buy, and that's how you view the importance of winning the league these days.
"Chelsea had this great spell of buying when Jose [Mourinho] first went there and we accepted that challenge.
"It's good to accept challenges, it keeps the complacency away from your door and we carry on as best as we can."
In terms of Sunday's encounter, Ferguson is likely to make his team selection based around planning for the start of the Premier League season next week.
He told a news conference at United's training ground: "I have always viewed the Community Shield as a stepping stone to the first game of the season.
"It's very easy to get emotional about this type of game but I don't think we will be changing our policy."
City will start with Aguero on the bench while last season's top scorer and talisman Carlos Tevez is still on leave following Argentina's Copa America campaign.
That situation has done little to quell speculation over the 27-year-old's future.
Mancini said: "We said he needed to come back on August 5 with Zaba [Pablo Zabaletta] but it was my mistake because I told him come back on August 8.
"Carlos comes back on Monday because he has 21 days after the Copa America."
Source: Team Talk
Source: Team Talk