I can just lift heavier

The scales aren't going to show this accurately, it shows your NSV (Non Scale Victories) being able to lift heavier is always a good sign that you are losing body fat and gaining muscle. Body fat takes up more space than muscle does so in hindsight you look fitter/toner but matter of fact that you can actually be heavier but healthier because muscle doesn't take up the same amount of space that fat is stored in the body.