A fifth game without a win brought only frustration and more concerns about the club's alarming slump after 10 straight wins under Pep Guardiola.
On the eve of this match, Guardiola launched an impassioned defence of his methods, even going so far as to suggest that he would rather quit and go home to Spain than change his ways.
Kelechi Iheanacho came on at half-time and had an immediate impact scoring early on in the second half
Raheem Sterling and Leroy Sane celebrate with Iheanacho as City draw parity with their Premier League rivals
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Guardiola's demand that his team 'stop being kind to opponents' following a string of individual errors also seemed to fall on deaf ears as John Stones gifted Southampton the lead in the first half.
Everyone knew the young England defender was not the finished article when he joined City from Everton for £47.5million in the summer, but it is proving to be a harsh learning curve for Stones.
He was exposed on several occasions in the Nou Camp, and his suicidal back-pass that let in Nathan Redmond here was typical of the mistakes that he needs to cut out of his game.
For City, too, there were some familiar failings at the end of a difficult week.
Guardiola responded to the speculation surrounding the futures of Vincent Kompany and Sergio Aguero by including both men in his line-up. Kompany made his first Premier League start since April following suggestions from the manager that he wasn't in the right frame of mind to play against Barcelona. Aguero, meanwhile, was reinstated after two matches on the bench, having been noticeable by his absence in City's warm-up at the Nou Camp.
Southampton boss Claude Puel (left) and Manchester City counterpart Pep Guardiola embrace before the match
Southampton substitutes James Ward-Prowse (right) and Jay Rodriguez share a joke on the bench
The frustration continued for Aguero in a flat first half in which he tried, and failed, to shake City out of their lethargy. Too often, the little Argentine could be seen turning away with his head bowed in consternation.
It didn't help either that he was to blame for Stones' effort being ruled out after the England defender thought he had atoned for gifting Southampton the lead in the 27th minute.
Quite what the England defender was thinking is anyone's guess as City tried to play the ball out from the back. He passed it back towards Claudio Bravo without so much as a glance in the goalkeeper's direction, and instead knocked it perfectly into the path of Redmond.
The Saints winger could hardly believe his luck. Bravo was out quickly but couldn't prevent Redmond from skipping around him and turning the ball into an empty net.
Stones looked crestfallen and understandably so. Individual errors have cost City on their winless run against Celtic, Tottenham, Everton and Barcelona, and here was the worst of the lot. It means City have kept only one clean sheet in 12 Premier League games under Guardiola.
Kevin De Bruyne (right) and Charlie Austin battle for the ball during the opening stages of Sunday's encounter
Southampton centre back Virgil van Dijk carries the ball out from the back in a bright start by the visitors
Stones' anguished expression turned to joy four minutes later when he lost his marker to meet De Bruyne's free-kick to the far post with a first-time shot past Fraser Forster, but referee Mark Clattenburg ruled it out on the advice of his assistants because Aguero was offside when he tried to reach it. It was hard to see how the striker's actions put off Forster, but the goal was chalked off to add to City's frustration.
It was 38th minute before Ilkay Gundogan produced their first legitimate shot on target and there were a smattering of boos around the Etihad when an underwhelming first half drew to a close.
De Bruyne, whose main contribution up to that point had been to fail to pick out Aguero when they were two on one against Virgil van Dijk, was replaced at half-time by Iheanacho as Guardiola tried to reinvigorate his team, and it paid dividends within 10 minutes of the restart.
Fernandinho was the creator with an exquisite 45-yard first-time pass that picked out Leroy Sane's run into the box. The German youngster's first touch let him down but he retrieved the ball from the corner and crossed to the edge of the six-yard box where Iheanacho had got his body across Van Dijk to turn it home. It was the Nigerian's eighth goal in his 11 games, and not the first time he has bailed out his more experienced team-mates.
Nathan Redmond (right) tries his luck at running past Ilkay Gundogan at the Etihad Stadium
City playmaker David Silva (right) tries to evade the challenge of Saints midfielder Jordy Clasie
It was also the spark for a more positive, assertive City to up the pace as Southampton were forced onto the back foot. David Silva bundled the ball just wide and Forster blocked the Spaniard's shot from a difficult angle after getting down well to turn away a shot from Gundogan.
Frustration was never far from the surface, however, and Aguero followed Kompany and Aleksandar Kolarov into the book for needlessly chopping down Charlie Austin right in front of Guardiola.
Claude Puel's reaction was to send on Pierre-Emile Hojbjerg and record signing Sofiane Boufal, and it was Hojbjerg's run and pass that wrong-footed Kolarov and gave Austin the chance to test Bravo with a fierce effort from 20 yards as Southampton offered a reminder that they still offered a threat of their own.
With seven minutes left on the clock, Aguero burst through and beat two defenders. It was the kind of scenario we have seen before and usually ends with the ball in the back of the net. This time it rolled well clear of the far post and the moment was lost. It has not been his week, and this wasn't really City's day either.
Clasie was in the thick of the action once more - pictured here trying to tackle Raheem Sterling
Sergio Aguero runs at the Southampton backline as the hosts look to break the deadlock
Guardiola stands on the touchline as he instructs his side following a less than impressive start
And Guardiola saw his side pay the price for their slow start as Southampton took the lead through Redmond
The Southampton forward capitalised on a loose ball from John Stones to round Claudio Bravo
Redmond completed the move by finishing calmly into an empty net to give Saints the lead
Redmond punches the air with delight as he scores his first Premier League goal away from home for his new club
The 22-year-old celebrates in front of the travelling supporters as they take a 27th minute lead
Southampton's celebrations contrast differently with Stones who knows he's at fault for their goal
Just minutes later Stones thought he had redeemed himself by scoring from a De Bruyne free-kick
However, the England international's joy was short-lived as his goal was disallowed for an offside by Aguero
There was a scare for Saints when the impressive Van Dijk needed medical attention for a head injury but he carried on
Sane rises high to beat Cuco Martina to an aerial challenge as City went in search for a winning goal
Silva tries in vain to open the Southampton defence late on as the hosts' winless stretches to five games in all competitions