The fierce rivals, who are separated by two points in the league table, face each other this weekend.
When asked if Roberto Mancini's men are title contenders, Bruce said: "They have to be now, there's no question about that.
"In the past when I was playing, no disrespect to Manchester City, the big derby was Liverpool. Liverpool were the ones Fergie wanted to knock off their perch.
"But certainly now, the noisy neighbours are making great strides. It should be a fantastic game."
The Premier League showdown takes place at Old Trafford on Sunday.