They have already slipped five points behind Arsenal and Tottenham at the top of the table.
But Phelan told talkSPORT: "He's not been at the top level for as long as he has without gathering all the experience to deal with these situations.
"I'm sure he'll stand up and be counted like the rest of the squad. It was a poor result against Manchester City, getting beaten in a derby is not the end of the world, but it's how you perform.
"David will realise the magnitude of the job and the players available."