Scald milk, add granulated sugar, salt, and nutmeg. Cool to lukewarm. Sprinkle or crumble yeast into warm water (use lukewarm water for cake yeast), stirring until yeast is dissolved.
To lukewarm milk mixture add oil, egg and dissolved yeast, blending with spoon. Add flour gradually, beating well. Cover with waxed paper, then clean towel, and let rise in warm place (about 85 degrees) until double in size.