The Dolly Blues were narrowly beaten 2-1 by the league leaders in Saturday’s top-of-the-table clash in the NPL Premier Division at Giant Axe.
The results saw second-placed City slip six points behind, having played three games more.
Carsley admits his team now face a tall order to overhaul the Mariners, who are a full-time operation.
But they will continue to fight until the end, knowing that at the very least a play-off place is theirs for the taking.
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“You can never say the title is gone because anything can happen between now and the end of the season,” said Carsley.
“It would have put us right back in the thick of it if we had got the win.
“I think winning the league title was always going to be a push for us although I am not saying we out of it, but that win has put South Shields in a strong position.
“Looking at budgets, everybody would expect them to be coasting it, to be fair.
“We have got lads who are window cleaners and plumbers – they are able to train every day.
“But we have a bit of a mini-league going on and the manager has told us what he thinks we will need if we want to win the league.
“Before Saturday’s game, the gaffer felt we needed 12 wins and so it’s going to be tough.
“We think 68 points gets us in the play-off so we know what our targets are for where we want to be come the end of the season.
“It’s up to us to go out there and get the results that we need.”
Despite the loss, Carsley believes City can take heart from their performances against the title favourites.
“It was always going to be tough game but I thought we played well against them and matched them in most areas.
“They had two chances and scored two goals scored two goals but I suppose that’s what happens when you can afford the strikers that they have got.”
Carsley is hoping for clean bill health and a run of games over the remainder of the season.
A series of injuries have kept him on the sidelines over the first half of the season, hindering his progress.
“It’s been hard work,” admitted Carsley, who hopes to lead the line away to strugglers Ashton United this weekend. “I set off in pre-season flying.
“I got two goals against Barrow, two against Llandudno.
“But within the first two or three weeks I started picking up a few niggles which I had from last season.
“I had tendonitis in my Achilles and came back from that but then against Northwich Victoria at home I did my ligaments which set me back three weeks.
“Then against Nantwich away I ended up unconscious on the pitch and so had to miss games under the 19-day concussion rule.
“The last few weeks I have had a good run of form.
“I think I’ve got five in four games.”