Dissolve yeast in warm water in a large mixing bowl; let stand 5 minutes. Heat milk; add sugar, salt, nutmeg; stir until sugar dissolves. Cool milk mixture to 105° F to 115° F, and add to yeast mixture. Add egg, 2 Tablespoons cooking oil, and 1 cup flour. Beat at medium speed with an electric mixer until smooth. Stir in enough remaining flour to make a soft dough.

Place dough in a well greased bowl, turning to grease top. cover and let dough rise in a warm place (85° F), free from drafts, about 1 hour or until double in bulk.

Punch dough down; turn out onto a lightly floured surface and knead 4 or 5 times. Roll dough into an 18x12 inch rectangle; cut dough into 32 (3 x 2-inch) rectangles. Place on a floured surface; cover and let rise in a warm place, 30 minutes or until doubled in bulk.

Pour oil to a depth of 3-inches into a Dutch oven; heat to 375° F. Fry 4 or 5 beignets at a time in hot oil about 1 minute on each side or until golden brown. Drain well on paper towels; sprinkle with confectioners sugar. Serve warm. Yield: 32 beignets.