Step 1

Scald milk and dissolve the sugar and salt in it. Add nutmeg. Let milk cool to lukewarm and combine with softened yeast in lukewarm water. Stir in the egg and oil and thoroughly blend in flour, a little at a time. Cover the bowl lightly with a cloth and let dough rise in a warm place until it has doubled in bulk, about 1 1/2 hours. Turn the dough out onto a well-floured pastry board, deflate it and knead it gently. Roll it out into a rectangle 18" long and 12" wide and cut into 36 pieces, each 3" by 2". Cover lightly with a towel and let beignets rise on the pastry board for 30 minutes.

Step 2

In a fryer or large saucepan, heat fat for deep frying to 375 degrees. Cook the beignets, a few at a time, until they are golden brown. Drain quickly. Dust immediately with powdered sugar and serve at once while hot.