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The Blues lost their first league game at the Academy Stadium since April 2015, thanks to Jordan Nobbs’ long-range free-kick.
The loss dented the champions’ title defence but Cushing says his side use every experience proactively.
“I think defeat is the best possible motivator for us,” he said. “The players will want to put things right.
“Once we went 1-0 down, we got another 5% from the players – purely because they didn’t want to lose.
“We’ve never his the fact we want to win the Spring Series but if we don’t, it will just propel us to work harder in the summer.
“The WSL is really competitive and we know it’s hard to win every time. You have to be at your best.
“We’ve just gone a year and a half at our best and we’ll still be at our best but one thing we have to do it try and get the best physical team on the pitch.”
Cushing admitted City had also found it tough to recover and prepare, following Thursday night’s crunch clash with Chelsea.
“I thought it was probably too quick a turnaround after a really difficult game against Chelsea,” he conceded.
“The previous games and probably the last 12 weeks has caught up with us.
"Maybe if we'd have had a seven day break and a normal schedule, then we can look for logical reasons as to why we might have lost.
“I think it’s as simple as: when collectively everyone is a little bit off and missing tackles, we're technically a bit inconsistent.
“We were a little bit off as a whole but there’s no shame in being tired – we’ve caused that ourselves by being successful.
“The game went as I expected. One thing I said to the players was that Arsenal will try and dominate the ball just like we do. It’s their style.
“If we’re not able to get up to the ball and be compact then cut those spaces, they will get some rhythm and dominate the game.
“It almost ebbed and flowed between who had the ball and who controlled it.
“That’s unlike us – we normally minimise counter-attacks and control the ball a lot but when you’re off and maybe a second behind, you’re not physically fresh. That happens.
“I was pleased with the players’ attitude and application. When the tank is empty, you have to rely on heart, desire and a real willingness to win.
“The players went down to the end and could have fallen apart because they were so tired but in the end, they were unlucky not to nick a draw.”
Asked what the defeat meant for City’s title hopes, Cushing replied: “I think it means the title race will go down to the wire.
“We always plan to win so if we win our last two games it will go down to goal difference.
“Chelsea will as well and I think they will win it on goal difference.
The Blues travel to Sunderland (Wednesday 31 May, 7pm) and Liverpool (Saturday 3 June, 3:30pm) in the final games of the season.
Cushing admitted he will have to make squad alterations to allow players to rest ahead of the Euros.
“We’ll have to rotate the squad a little,” he added. “It’s hard to play a tournament being going into a tournament.
“The players are now playing tournament football, playing every three days.
“They need a big break before going into the Euros.
“We will do all we can to prepare the players. We rested Karen Bardsley and we’ll rest more players this week because we want them to do well for England.
“We’d always planned at the end of the Spring Series to rest her because of the Euros. We want her to go in fresh and mentally ready – she’s England’s number one.
“It’s the same for Lucy Bronze and Steph Houghton. If we get the opportunity in the next six days, we will try and give them a rest.
“We will play our part in trying to give the Lionesses the best chance of success.”
Jordan Nobbs’ stunning long-range free-kick separated the sides at the Academy Stadium, as the Blues suffered their first league home loss since the two sides met in April 2015.
The Blues paid their respects following Monday’s tragic events by donning ‘We love Manchester’ t- shirts during the warm-up, before a well-respected and emotional minutes’ silence was conducted prior to kick-off.
The Blues claimed a crucial victory in the Spring Series title race, thanks to Toni Duggan’s strike, but the evening was overshadowed by the tragic events earlier in the week.