The Ifo Institute's widely watched indicator of business sentiment in Germany showed an unsettling sign for Europe's biggest economy as it unexpectedly dropped to 94.6 from 96.0 in May. A statement from Ifo said that while the drop was a letdown it was still expected that Germany would experience a moderate recovery later this year. "It's a disappointment for everyone, we expected, really, an increase in the indicator," Ifo Institute head Hans-Werner Sinn said on CNBC Europe television. "Let's wait another two months to make a real assessment." The index fell across all four sectors in which executives were surveyed: manufacturing, construction, wholesale and retail. Their assessment of current conditions dropped from to 93.2 from 94.4 in May, and the outlook for the future fell to 96.0 from 97.7. It was the second straight monthly drop; the institute says it takes at least three straight months up or down to establish a clear trend.