Arsenal now favourites for the title, admits United boss Ferguson

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The Scot regards being top at New Year as one of the season's significant milestones and that position is now occupied again by the Gunners, who won 4-1 at Everton to go two points clear after United had stumbled to a 2-1 defeat at West Ham.

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He said: "I always feel if you reach New Year on top you have a massive chance. We still have a great chance but obviously it was disappointing to lose the way we did."

Unsurprisingly however, the League's most successful manager was unwilling to write off his players following one below-par performance on a day when Wayne Rooney was absent through illness.

He added: "It's a great team we've got and we just have to galvanise ourselves and get the reply you always look for after a bad performance.

"We need to go on a long run now because we are coming to the crucial part of the season. In many ways the season starts mushrooming.

"There are league games, Champions League football and FA Cup ties. It's a congested fixture list and you have to respond and play football properly."

The new year - which starts the day after Ferguson's 66th birthday - begins with a home game with Birmingham, who are managed by one of his former players at Aberdeen, Alex McLeish.

And Ferguson was confident Rooney would be back for that game along with fellow illness victim Michael Carrick.

He said: "Wayne and Michael should be okay, they were both suffering from a virus. Michael was taken ill during the night, the doctor attended to him on Saturday morning and there was no way he could have taken part.

"Wayne was ruled out on Friday. There's little bits going down at this time of year, quite a few clubs have got it I suppose. But hopefully they will be ready for Tuesday."